April 24, 2022
Many individual investors discovered the anomalies in the market structure because their \"buy button\" was turned off. It was a failure at many levels of our complex market structure. It exposed the underbelly of markets that have remained opaque for too long and caused many investors to question the very core of our markets and whether they really own the shares they bought. Current regulatory disclosures are inadequate to give the public confidence in the system, and inadequate to control systematic abuse of the system.
The most recent example of agressive, or even better put, predatory use and abuse of short selling happened in January of 2021 when 140% of the company Gamestop float was short. This should NEVER happen and the following actions of several brokers to prohibit their client's of buying this companys shares spoke with volume that loaning shares and short selling itself needs more disclosure.
Controlling Stock Lending: Investors have the right to decide whether their securities can be loaned to short sellers, and who borrow's their shares.
FTD Visibility: Failed delivery information should be updated more often and include more information, including how and when fails are corrected, what type of counterparty is responsible for the failure (clearing broker, exempt market maker, or custodian), and how long the fails have remained open.
Modernize rule 605 which haven't been updated in 20 years, and make rule 606 public again is a step forward to make this market more transparent and fair for all.