April 20, 2022
Hi there, just had a comment about the NSCCs liability waiver portion of the proposed rule.
Rule 58 of this proposed rule will not present enough accountability on the NSCC, and thus will not garner trust from the public, if the NSCC can simply waive its responsibility to ensure the transaction data supporting this proposed regime is complete and accurate. Gross negligence for delays and conveying the info to the public is alright, but the NSCC should also be on the hook for the completion and accuracy of the data here.
The NSCC should take a part in verifying the accuracy and completeness of this data and should disallow any members from participating without their consent to have their books audited by an independent auditing entity not selected by the firm and also on the hook if the datas inaccurate. That this financial system places such an emphasis on independent auditors for public companies and zero for hedgefunds does not make sense to me, when these activities of these HFs can negatively affect public pension plans and potentially lead to firesales as this proposed rule cites. As the infrastructure is now, oversight would be incapable to administer the program proposed in this rule and thus I am skeptical of the illegal unwinding of positions that involved the sale of securities that were not theirs'n. The proposed rule offers an opportunity for such sellers to buy these positions back in a setting beyond the marketplace, thus the proposed rule will erode trust and integrity in the marketplace to hold all who participate accountable.
Given the length and voluminous amounts of finra enforcement actions and sec enforcement actions against brokers and funds for failure to keep accurate records, sometimes apparently intentionally but without admission to fault, it seems like this system will further incentivize such inaccurate records and shoddy practices with no real accountability.