Apr. 20, 2022
Dear SEC, The following is a comment for File Number SR-NSCC-2022-003: I vehemently oppose this proposed rule due to the existing glaring lack of transparency and accountability for large institutions and market makers in the market at the expense of retail. Our markets are already rife with manipulation, as true price discovery is precluded by payment for order flow between market makers and brokerages, high frequency trading, dark pool internalization, wash sales, spoofing, options trading and other derivatives, false reporting of collateral and short positions by large institutions, fails-to-deliver, and finally an unacceptable and inexplicable absence of any mechanism to track both legally borrowed and naked shares which are shorted into the market. The last point underscores the need for a blockchain market or some more rudimentary system such as direct share registration to minimally prevent shares from being shorted multiple times. An even bigger problem, however, lies in the fact that a locate and legitimate borrow is not always required to short shares, and this contributes to widespread predatory short selling, which results in failures to deliver that can be continuously rolled over and hidden in options derivatives. Having established that premise, this rule would further impede true market price discovery by facilitating predatory naked short selling. It also removes the infinite risk of naked shorting entirely, and in so doing the deterrent of engaging in what is supposed to be very risky business practice. Shorting is a facet of our market which has been banned in several other countries, for good reason, because of its effectiveness in the targeted suppressing of upwards price movement and the complete inability to adequately track these shares is ripe for abuse in bankrupting and cellar boxing companies This rule is not in the best interest of retail trades and exclusively benefits market makers who benefit from controlling price action in their favor under the guise of providing liquidity. These practices result in fails-to-deliver in which shares purchased in the market, often by retail, are not delivered because the share was never located in the first place. This fallout of naked shorting is completely unacceptable and should be eliminated in our markets. Why should anyone be allowed to short a share without locating and borrowing it first? Retail certainly cannot do this. Is it not apparent how not requiring a locate can contribute to near infinite and predatory short selling to reduce the price to whatever is desired? This is not true price discovery and operates well outside the laws of supply and demand. These FTDs are rolled over by firms engaging in short selling, which can use deep in-the-money call options to or out-of-the-money put options to claim they possess these shares and balance their books, when they in fact do not. To resolve this we need to enact instant settlement and delivery of every share shorted in the market. This proposed rule is a slap in the face to retail investors who are beholden to the SEC to regulate brokers, market makers, and clearing houses who control our markets. This rule has been proposed twice before and I here oppose it a third time. I will not support rules which are intended to allow Wall Street to duck their financial obligations and remove risk and responsibility from their extremely risky practices including excessive short selling and using excessive leverage. Retail is getting the short end of the stick in: 1) allowing multiple types of institutions to profit off of every trade, 2) having their investment upside stifled by larger institutions who manipulate prices in opposite directions using derivatives, short selling, and payment for order flow, and 3) bearing the responsibility of bailing out Wall Street when their bets blow up in their face. Retail traders are responsible for every dollar and every share that they risk in our markets and do not have the luxury of skirting the rules, yet institutions and market makers have increased liberties both in trading and in meeting their obligations. I implore you to take this threat to the very sanctity, fairness and transparency of our markets for what it is - a threat against every single retail investor. This is a threat not only to the integrity of our markets, but also to the public's trust in them. Please put a stop to this and reject this proposed rule. Regards, Tim