April 20, 2022
This rule is blatant dis-empowerment of retail, and destruction of price discovery for securities.
If a share has been sold short, specifically naked shorted (which is \"illegal\"), it MUST be purchased on the lit exchanges, not by avoiding increasing the price of the security by utilizing a SFT or FTD for that matter. This is only beneficial for large institutions who have abused naked shorting and are trying to delay real price discovery. There is no other way to describe this than literal theft of the shareholders of the stock which is being shorted. The entire point of having a set number of shares available is to establish value for a company. If anyone can create shares out of thin air, and sell them, and never return those shares, they are directly stealing from the company and its shareholders. \"Liquidity\" and \"Reduced Volatility\" (actual price discovery) are not good enough reasons to give large institutions the ability to avoid repayment of their obligations and poor bets. If this was a retail seller, they would just lose their money, but for some reason it's acceptable for these institutions to get free passes and rules which only benefit themselves. If an institution can not meet their obligations, they should not be making them in the first place.
How about a rule which actually benefits retail investors and market transparency? Maybe something like: removing the ability for Market Makers to create synthetic shares, and actually making naked shorting illegal and enforcing it, and forcing institutions to disclose their short positions.