August 3, 2010
Benefits of Electronic Disclosure of Positions
and Independent Net Capital Calulations by Broker-dealers per SEC Rule 15c3-1:
The disclosure of positions would serve as a National Stock Record. Who owns what and where. Such share balances could not exceed the outstanding issuance of shares.
Receipt of Net Capital Calculation would be received not weeks from month end but in real time. Broker-Dealers would not need to be good on month end but all around the month.
The costs of a variety of firms preparing a variety of reports and the costs of audit by various regulators would be substantially reduced if not eliminated.
The ability for the Financial Institution to manipulate such calculations is now eliminated as the calculation is done independently. The Firms would no longer have the ability to misstate Net Capital because they would no longer be doing the reporting the Net Capital
The greater level of scrutiny by the SEC and other Regulators should enhance the credibility of our Financial Markets, attracting a greater degree of investment.
If Hedge Funds knew the SEC had visibility to of who were shorting positions, such shorting would be substantially reduced.
There would be a standard of comparison for statements made by the executives regarding Capital levels if the Calculations were to be done independently of the firms. Comments of executives of Bear Stearns and Washington Mutual, now the subject matter of litigation, may have been circumvented.
There would be a more efficient use of tax dollars. Review of manual calculations would become unnecessary allowing for application of resources elsewhere.