April 20, 2022
We are told in Investing 101 that shorting a security carries \"infinite risk\", because while it's possible that the short party can be precisely correct and said security can go to 0, it can also rise to any arbitrary price. This is essential in a fair and free market. Apparently, the parties proposing this rule do not agree with that sentiment.
This rule would allow a small collection of favored market participants to simply ignore their obligation to clear their short position, and instead use a vehicle that would allow them to maintain their position indefinitely. This would be tantamount to allowing them to claim all of the potentially ludicrous profit of shorting vulnerable companies with none of the risk. If the SEC claims to be responsible for maintaining a free market where the playing field is level for all participants, this rule should be blocked.