Apr. 21, 2022
Karl Johan Godø 04/21/2022 Vanessa Countryman, Secretary Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-0609 RE: SR-NSCC-2022-003 Dear Secretary Countryman, I'm writing to you to comment on this proposal made by the National Securities Clearing Corporation. I am not a US citizen, but heavily invested in the US market. I strongly disagree with ALL passages composed within SR-NSCC-2022-003. The main criticism of the central clearing for SFTs transacted by any members of the NSCC (including sponsored/delegated members) is the overall intent. It is perceive as a waiver for certain members engaged in over-leveraged short selling. Further, it helps prevent these members from getting liquidated due to their extreme and currently overly extended margins. Above all, the context of their proposal is disguised to remark the reduction of market disruptions caused by fire sales. There is no evidence to show that this will prevent such scenarios. Fire sales and irrational exuberance are naturally part of the stock market’s behavior. If the US stock exchange is indeed natural, there is no justifiable reason to enact SR-NSCC-2022-003. Upon further review, the following statements impede on the natural events that erratically occur as a consequence when funds/institutions consciously undertake positions which results in negative returns. To proclaim “gross” values rather than “netted” values on their balance sheets to bypass regulatory capital thresholds. This is perceived as neglect in risk mitigation. Net values reported on balance sheets are trusted values and should always be the data point for any source of truth. Gross values are projected values and should not be used as a determinant of actual returns, thus they should be voided from being used to bypass thresholds. With that said, the proposed statement above (if passed and enacted as an official rule), breaches the Dodd-Frank Wall Street Reform and Consumer Protection Act, Title II, § 204 & 205. For existing NSCC members to nominate and elect their own or external members to the SFT clearing corporation, this will legalize the processes of off-loading high-risk assets. Understanding that certain securities are prone to extreme volatility, by allowing delegated members to transfer obligations, the effort of traceability to the parent entity will prove to be exhaustive in effort as there are no defined bounds to cap the frequencies of transfers and size of transfers. This is perceived as negating high risks positions through dispersive means. Most importantly, if the rule allows members to off-load risk, they are able to vet the process to reset Failure-to-Delivers that is meant as a consequence for upholding short-selling positions. As stated above, the infinite branching induced by extensive transfers create exclusive hardship to conduct studies and reporting on short selling. If the proposed rule is to be officially imposed, it would breach Dodd-Frank Wall Street Reform and Consumer Protection Act, Title IV, § 417. Sincerely, Karl Johan Godø 6055 Godøy, Norway