Oct. 30, 2022
Dear SEC, Thank you for the opportunity to comment on proposed Rule 13f-2 under the Securities Exchange Act of 1934. As a retail investor, I believe Transparency, Simplicity and Fairness, Choice and Control, Best Execution and Better Settlement and Clearing should be at the forefront of all policy decisions made by you. But how can we implement these principles if there isn't sufficient data to keep bad players accountable? The current system is flawed, and lacks teeth. This is because current data: “(1) fails to distinguish economic short exposure from hedged positions or intraday trading, (2) fails to distinguish the type of trader short selling or identify individual short positions, even for regulatory use, and (3) fails to capture the various ways that short positions can change and the various ways to acquire short exposure.” These are significant and material shortcomings in the transparency of US capital markets, but the Commission neglects to acknowledge the impact of these shortcomings. The lack of transparency into short positions has led to deep mistrust in markets for retail investors, and especially for newer retail investors. The Commission risks alienating these investors and driving them away from US capital markets if they do not act to provide transparency and certainty for them. We need increased transparency despite the pushback from industry firms who face increased compliance costs, and I fully support the Commission in this rulemaking, and urge the Commission to go further with these disclosures. Our movement is born from frustration over the many complex and conflicted aspects of market structure, with a lack of transparency and visibility into the inner workings around short selling being a primary driver of our retail investor supporters. The lack of transparency around short positions, the inability to adequately quantify short interest, and the ability for firms to skirt regulation through derivative positions such as options and security-based swaps are making a mockery of our free and open markets. The inadequate ability to properly measure and understand economic short exposure leads to supply/demand imbalances in markets and affects trading prices. The protests of the industry in terms of the effort required to comply with the Proposal ring hollow given the Commission’s experience with interim temporary Rule 10a-3T - firms had no problem complying and the data provided was useful to the Commission. Indeed, the Proposal is easier to comply with, given the monthly rather than weekly reporting of interim temporary Rule 10a-3T. However, the Proposal does not go far enough. WTI urges the Commission to provide the same level of disclosures and transparency for short positions as is currently done with long positions via 13F filings. None of the arguments for aggregation or lagged reporting are consistent with the reporting of long positions via 13Fs. Our markets already have a position disclosure standard, and that standard should simply be updated with short positions to allow retail and institutional investors to do the same kind of analysis regarding short positions as they currently do with long positions. If one of the primary goals that the Commission is seeking to achieve with the Proposal is to give retail and institutional investors, along with regulators, better visibility into economic short exposure, it is imperative that all short exposure is included. Thank you for considering this comment. Sincerely, Caleb Giesen