April 21, 2022
Between FTDs, payment for order flow and routing of purchases through dark pools, the market already lacks transparency and accountability for large institutions. I am disappointed this rule is being proposed.
The onward lending proposed in this rule would increase avoidance of true market price discovery, hurting investors that trust in market fairness and market efficiency. It also removes the infinite risk of naked shortin by providing an instrument to avoid penalty or bear the risk of this practice.
FTDs are already reset through a variety of methods such as using deriviatives not allowing them to reach their 30 day mark where the security needs to be delivered. Ultimately, if you borrow or owe a share to a counterparty, you should be required to pay it. It's basic mechanics.
The SEC states that it works to protect the interests of investors and promote a fair market, but this proposal seems to seek protection and create a forced delivery detour for market makers that hold too much power and profit in the market at the expense of transparency, accountability, and fairness for all investors. Please consider pulling this proposal.