Apr. 19, 2022
Dear SEC employee, First off thank you for what you do! I would not be able to do your job. I just got done reading SR–NSCC– 2022–801 for the 4th time and let me tell you that is some DRY Wall speak. When it comes down to it this proposed rule just seems like a complex fix for a complex problem. At the end of the day retail investors do not benefit from complex systems, we need efficient markets that offer the best price discovery possible in order to have even a bit of a fighting chance against the current institution. The only parties that stand to benefit from this complexity are Wall St, Big Banks and Hedge Funds, especially the "bad actors of the industry" who run business models of idiosyncratic risk via nearly unlimited leverage. These parties have influenced the rule making process over generations in far greater ways than retail ever will, or has. They are the ones that stand to benefit from a complex system with rules written so convoluted and boring they make your eyes water, not retail. If I understand this rule proposal correctly you are suggesting that SFT( Securities Financial Transaction.....btw. love that wording ;) be used as a placeholder for any securities transaction. This really makes no practical sense to me since it would mean that company A would be valued the same as company B on any given day, this seems extremely inefficient and unrealistic when you consider the large variety of variables that effect a stock's price on any given day. I would also like to add that this seems like a very convenient way to can kick FTD's ( Failure to Deliver) down the road and avoid buying in at a current market value. If you are trying to better regulate the issue of abusive share lending by bad actors, why would you make a rule change that makes it easier to facilitate that practice ? How about better lending disclosures for retail ? shouldn't we have the right to know if our shares are being lent away and what is being skimmed off the top ? Please don't forget about the little guy...... This rule proposes using a vehicle, they call an SFT (Securities Financial Transaction ... sigh), as a placeholder for any securities transaction. As I understand it, these SFTs are fungible like a dollar bill. So, if you have 100 worth of SFT that you SHORTED, and want to Fail to Deliver rather than buy-in at market value, you can resolve it by utilizing another SFT worth the same amount set for the same delivery date. The cost one would pay for this "feature" would be based on the difference in closing price from one day to the next. This cost would be much cheaper than a market buy-in, especially when the floor for a security is like $1,420,696,969,420,741. Seems like a cheap way to can-kick a scary-ass FTD problem (idiosyncratic risk anyone?), rather than buy-in at current market value. I.e. seems crafted to protect the practice of abusive short-selling, when it doesn't work out for the SHF.