April 21, 2022
I wish to make it clear that I strongly disagree with the NSCC's desire to 'increase the capacity of market participants to engage in SFTs'. This is yet another means for institutions to generate income through risky lending/borrowing of securities. The NSCC is proposing to mitigate the risk for counterparties by centrally clearing transactions and reducing the chances of fire sales/runs but I believe that ultimately it will expose the market as a whole to increased risk, categorized by ever increasing levels of borrowing and precariously/desperately balanced collateral. The rules in this proposal will also lead to reduced incentives for thorough due diligence between counterparties of SFT transactions as the NSCC is proposing to considerably alleviate their exposure. I understand the desire to reduce the chances of volatile activity - but if this is really the aim then the proposal should be addressing the root cause of the issue and making lending/borrowing of securities harder rather than easier in the first place.