May 29, 2011
Bi-weekly short reports are far to infrequent. The vagueness in the short volume that is now found in the FINRA Reg SHO Daily Files is of no use to the public and is largely misunderstood. If the transactions where more detailed and the reporting where explained clearly, the daily routine of broker-dealers may be better understood.
Sentiment is of the greatest concern when considering a long-term investor, clarity will improve sentiment.
Perhaps a more currant accounting of short activity could also lead to a shorter mandatory delivery time, which would do even more to greatly improve market sentiment.
Copycat trading will always exist regardless the best or worst of regulations. Both sides of the trade could use the information. Perhaps there will be ways for abusive market practices found. I would think it could also benefit the regulators as it would be easier for more eyes to identify abuse.
Feasibility and cost would best be answered by those who report the trades, or those who receive the reports. This question posed to the ones who report the trades reminds me of asking the fox to guard the hen house, their answer will likely be that it will be difficult and costly. I cant address the issue of feasibility and cost but feel that there would be great value.
In summery my opinion is that as it is now shorts seem to have the advantage of discretion, the average investor who may not ever short individual stocks has this perception. This apparent disadvantage leads to a distrust of the entire market. I am confounded as to why if the possibility of accurate daily short reporting exists it is not already being done, and why we are being ask if it should be done. I think an improvement to the image of the entire regulating regime could be an unintended benefit.
I applaud Dodd-Frank for suggesting the simplest of logical, common sense ideas.