April 22, 2022
The proposed amendment states, in part:
\"in the case of a Default-Related SFT (as defined below and in the proposed rule change), the commercial reasonableness of a Buy-In shall be determined by NSCC based on whether, in the opinion of NSCC, such Buy-In would create a disorderly market in the relevant SFT Security.\"
The NSCC has been grossly negligent or even fraudulent in failing to manage the risks in equity liabilities under it. The proposed rationale suggests that an organized but fraudulent market is preferable to the NSCC being required to settle the risky obligations which they have knowingly been collecting returns on for decades. In other words, the presented rationales imply that crime is ok as long as it is organized.
Further, regardless of rationale, the proposed rule change must be rejected for the unchecked conflict of interest it represents. A group should not be able to propose a rule that grants itself unilateral discretion to delay obligations by a determination of reasonableness based solely on its own determination of a counterfactual hypothetical situation. This is especially so if the chosen definition of reasonableness entitles the Lender to remedy according to their rights and their discretion, not those of the NSCC.
If the SEC approves this proposal and delegates its regulatory responsibilities to the very agency that the SEC is supposed to be regulating, it would represent a shameless act of regulatory capture.
Do your job and protect retail investors that hold the obligations that the NSCC's members fraudulently opened with the NSCC's complicity.