April 22, 2022
This rule should be disapproved because SFTs create an additional level of risk. Lenders who dont own the securities lend them to short-sellers, devaluing the customers asset. This create a prime environment for abusive short selling. If SFTs are used only to provide liquidity it means Market Makers have failed to operate as required. If SFTs are used to deliver short-sales, that means that the initial short sale was already a naked short, which violates SEC REG SHO.