April 20, 2022
Team, it seems that the can-kicking of the obligation to fix the US Stock Market continues with the mere suggestion of this rule. Should it be implemented, it will create a red flag to retail investors confirming that the stock market is neither free, nor fair as it is widely touted to be.
What continues to baffle me is that you are proposing rules continuously targeting means to offload responsibility to actually fix the problems that FTDs create. This is all under the guise of \"providing liquidity\" to the market. This concept is now antiquated and this rule seems like a cheap way to avoid a very large problem posing very large idiosyncratic risk. This seems crafted to protect the practice of abusive short-selling, when it doesn't work out for the entity who willfully took on the risk of a short position.
What truly concerns me is the protective net being cast over the large financial institutions. Their greed, lack of risk assessment, and brazen financial maleficence has led the US and World Economies down very dark paths in the past (2008 Financial Crisis), and yet no true means of stopping these practices has emerged all while the problem only grows. If the problem had been solved, you wouldn't be proposing this rule because there would be no need for it.
Providing liquidity to the market directly contradicts the notion of true and proper price discovery. If you're buying a TV and the store says they only have 5, but there are 10 buyers, that will lead to true price discovery as each of those 10 buyers bids for 1 (or more) of the 5 TVs. However, if there are 1,000 more TVs in the back of the store they're not telling you about, then you have the US Stock market. It appears to me, as a retail investor, that you seem to be laboring under the notion that \"providing liquidity\" equals \"capital formation.\" These two things are NOT one and the same.
Finally, I simply don't understand how an FTD is allowed to begin with. NSCC and SEC will both argue that FTDs are \"normal.\" However I struggle to find ANY other industry where you can pay for something, not receive it, and the regulating bodies of that industry state this is \"normal operation.\" There simply must be a mentality shift in these regulating bodies such as yourself that this CANNOT continue. It MUST be stopped, and quickly. Fix the underlying problems, rather than piling on more and more needlessly complex rules and regulations in order to continue skirting the issue. If your hands are tied and you feel you're unable to do this with the current legal rights bestowed upon you, then it is YOUR obligation to cry for help. There is nothing wrong with stating facts that retail investors are getting the short end of the stick in today's (and yesterday's) stock market. Imagine the praise you will receive while advocating for the retail investor, rather than continuing to pander to Wall Street lawyers and large financial institutions whose sole purpose is to extract capital rather than create it.
Again, I am retail investor, and I am gravely concerned not only about the implications of this rule, but the market as a whole should this rule be allowed to go through. You need to think very carefully about who you are advocating for because should you continue down this path of catering to Wall Street firms, you're going to lose world-wide confidence in the US Stock Market and have a far larger problem on your hands. It is time for true and sweeping reform in order to simplify how the markets work. Stop adding complexity and make this system work, fairly, for everyone.