April 20, 2022
With regard to the SR-NSCC-2022-003 filing, I disagree and oppose the proposal. Any rule extending and alleviating the FTD cycles are at risk of obfuscating and hindering market transparency.
Instead of highlighting and penalizing firms that take on risk they can neither afford or take responsibility for, within a limited time frame, this rule tends to allow for horse trading levels of IOUs. I would encourage the SEC to enforce delivery of shares within a single FTD cycle, for exactly the same securities/instrument as was taken in the agreement that created the exposure.
It is difficult to see how this rule would dissuade parties from using SFT contracts which are much lower value than the market value of a security. I believe nobody would intentionally engage in abusive short selling but the possibility of creating a loophole with this ruling is ripe for misuse.
I believe the SEC is committed to creating and protecting a fair market for all participants and so would support a T+0 settlement time, a real-time FTD monitor that declares risk level and applications for renewals of FTD cycles and sever penalties for firms that take short positions without proof of purchase of underlying security/instrument within 10 days of taking position.
As always, your consideration is appreciated.