Subject: Comment Letter for File Number S7-08-22 Short Position and Short Activity Reporting by Institutional Investment Managers
From: Alex Thomson
Affiliation:

Oct. 26, 2022

 


October 26, 2022

By Email

Vanessa A. Countryman
Secretary
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 205499–1090
rule-comments@sec.gov

Re: Release No. 34–94313; File No. S7–08–22 Short Position and Short Activity Reporting by Institutional Investment Managers

Ms. Countryman:


As an individual investor in the securities markets, both via direct purchases and the ubiquitous "401k" plans, I have a vested interest in ensuring that our markets operate as efficiently and transparently as possible. 


To that effect, it is imperative that we, as Americans, have reliable and frequent access to data that affects our ownership in securities.  "Short selling" fundamentally attempts to devalue the underlying securities and it is imperative that both retail and institutional investors are able to see which firms in the industry have taken short positions against securities so that we may make informed decisions as to what firms we do business with. 


Additionally, the current lack of short position data creates massive systemic risk far beyond the individual fund or funds that hold the position.  Look no further than Archegos' implosion and the subsequent multi-billion dollar losses (and growing) incurred by Systemically Important Banks (SIBs).  As a taxpayer, I have paid/will pay to bail out the potential implosion of these banks/prime brokers.  It is unacceptable that firms within the industry can take risks via massive short positions without the timely release (read: daily/weekly) of their positions.  Sunlight is the best disinfectant. 


Lastly, as mentioned above, short derivative exposure must be included in the timely release of data. As firms attempt to hedge positions, it can create material impact on the underlying positions and can have as much or more impact as traditional short selling/long buying.  This compounded exposure, without available data, spreads risk far beyond the individual firms who hold the position(s). 


I fully support the proposal and encourage the Commission to go further to address the glaring holes in the current reporting structure.  Trust in the US Capital Markets is paramount. 


Sincerely, 
Alex Thomson