April 20, 2022
According to the text: NSCC understands that SFTs provide liquidity to markets and facilitates the ability of market participants to make delivery on short-sales, and thereby avoid failures to deliver, naked shorts, and similar situations. On a typical Business Day, The Depository Trust Company (DTC), an NSCC affiliate, processes deliver orders related to securities lending transactions on securities having a value of approximately $150 billion.
Why would it be beneficial to the market or to any investor in a company to make it easier for hedge funds, market makers or anyone else to create fungible tokens which allow them to skirt the already nearly completely opaque short reporting requirements? There is more than enough liquidity in the markets. If someone is failing to deliver - they should be made to deliver the security. If they took up a bad short position, skirting the rules and naked shorting into the oblivion cannot be allowed to persist in perpetuity, which this rule allows. Hold. Them. Accountable. For. Their. Actions. Dont change the rules to let them defraud millions of people.
This rule is an offence against retail investors and only serves to further complicate the market, again giving more power to those in the know in HFT firms, hedge funds, market makers, etc. While harming the publics best interest, and in particular, retail investors. Allowing a rule like this to go through would be an act of aggression and oppression against retail investors and will only deteriorate the public trust further in Wall Street and the SROs who claim to protect the public from fraud. This rule must be struck down (once again - I mean this is the 3rd iteration it seems) if the SEC, NSCC or DTCC want to keep any retail investors engaged in the markets. Otherwise, the lack of trust in such obfuscated centralized authorities will only persist further, pushing investors to decentralized exchanges with transparency.