Apr. 19, 2022
I'm a retail investor commenting because I have serious concern regarding the proposal SR-NSCC-2022-801, which proposes novation on failure to delivers and, significantly, naked short sales. The SFT, or Securites Financial Transaction, that's proposed is utter nonsense, providing what I'd refer to as a 'get out of jail free card,' wherein if a borrower (eg. hedge fund) is shorting a security and they opt to fail to deliver, rather than buy in on whatever the market value of the security is, they can use this SFT (get out of jail free card) as a substitute, and it actually serves as a cheaper alternative. This rule is NOT in the interest of a fair and free market, and only allows assistance to major market players like hedge funds, who do nothing but abuse the market regulations that are already in place. If a hedge fund is caught naked shorting a company, and cannot deliver on that short bet, they shouldn't be able to opt out for a cheaper alternative, and that is exactly what this proposed SFT allows. If a regular retail investor failed to deliver on any trade, they would not have the same luxury allowed to them, therefore if this rule is enacted, you are not protecting the free market, you are protecting big business. Naked shorting in particular, is the area of serious concern for me. Over the past few years we've seen companies with short interest of over 100% of the publicly available float, as per the SEC's own documentation, so this acknowledges that abusive short selling occurs, and this rule only perpetuates that cycle to continue further. It is already a miniscule penalty to these hedge funds to be caught engaging in naked shorts, why on earth should they be given even MORE leniency, at the expense of regular investors? I urge you to withdraw this proposal, as I believe it poses a serious risk to ensuring a fair, stable market. Best regards, A concerned retail investor.