April 21, 2022
To whom it may concern,
My name is Jolene Rheault and I'm a retail investor who has invested significantly in several companies that I feel passionately about and who have demonstrated tremendous growth during a pain point in history (i.e., the pandemic). LET IT BE SHOWN THAT I STRONGLY OPPOSE SR-NSCC-2022-003.
I ask where is MY protection from these companies who are attempting to avoid their obligations? What would happen if I manipulated the market illegally? Would you bail me out? I doubt it. The avoidance of market price discovery through onward lending is essentially the entire purpose of this rule. It removes that infinite risk of naked shorting entirely, and in so doing the deterrent of engaging in what is supposed to be a very risky business.
The NSCC explicitly understands that there are significant FTDs, Naked Shorts and similar that need to be cleared. This rule proposes a service to avoid those pesky obligations. It does so by introducing a new transaction layer that novates (replaces) old obligations b/w NSCC member lender / short sellers / prime brokers / etc. with a new obligation b/w a member and the NSCC itself as the new counterparty. This novation is done with even more lending of securities.
This rule should NOT be put into place as it does not protect the majority of the evolving stock market which is held by retail investors. If anything, I call for a suspension to dark pools. I call for the SEC and Gary Gensler to do what is necessary to enact SEC Rule 304 (a)(4).
This rule can be found in Federal Register Release No. 34-83663, File No. S7-23-15 section 304 (a)(4).
https://www.federalregister.gov/documents/2018/08/07/2018-15896/regulation-of-nms-stock-alternative-trading-systems
Mr. Gensler himself stated on CNBC that between 90-95% of trading takes place off LIT exchanges, in dark pools, where retail investors have no access. On March 31, 2022, Mr. Gensler released an educational video on dark pools where he acknowledged the dangers that dark pools pose to retail investors. He seems to have a very low regard for dark pools.
Rule 304 (a) (4) allows the SEC to remove any stock out of dark pools, at any time, for up to 12 months. We would like this to be done as soon as possible with stocks that have a high interest of retail investors, specifically GME and AMC. If this cannot be done, we deserve to know why.
If there is illegal activity in these stocks, it is on the part of hedge funds, market makers, prime brokers and banks. If they have acted nefariously, then they deserve the consequences of their actions, not the protection of the government. There should be no bailouts in place when the Department of Justice is conducting an ongoing investigation into the mentioned beneficial parties in SR-NSCC-2022-003.
Thanks,
Jolene Rheault