April 20, 2022
I am writing to you as a concerned international investor. It is my understanding that the following rule introduces additional privileges, which would further fragment the market into classes of advantaged entities. Haves and have-nots, so to speak. Just the suggestion that new members would be proposed by existing members is enough to raise serious concerns regarding market fairness.
It is already a point of discussion amongst my peers to what degree the US securities market is rigged or manipulated, and whether it is worth participating when investing from a perspective of fundamental value. Allowing privileged entities more ways of hiding bad positions and obscuring losses is not only extremely dangerous for the health of a market, it will lead to a complete loss of faith for other participants. Why should I invest in the US if my counterparty can abstract away their losses to the point that I would always loose? Why, as an EU citizen, would I want my pensions, investments and general wealth to be exposed to such a system?
Furthermore, I am a believer of simplicity and transparency promoting the most efficient markets and economies. Simply because imbalances and bad securities are discovered as such much earlier, avoiding catastrophic failures like the 2008 recession.
Please withdraw this rule proposal and those like it, creating less transparency and more privilege is never a good long-term solution.