Oct. 31, 2022
October 31, 2022 First I would like to applaud the U.S. Securities and Exchange Commissions (the SEC or Commission) release on proposed Rule 13f-2 (Proposal) under the Securities Exchange Act of 1934. Having grown up in the shadow of the 2008 financial crisis, and with the looming financial troubles of an economy that has been propped up by the very aggressive qualitative easing and money printing by the FED in the aftermath of Co-vid 19 - I am in full support of Rule 13f-2. If potential investors from my generation are expected to participate, we need increased transparency in the markets. In order for trust to be built between the markets and potential younger investors then we can't have a system that allows for massive amounts of short selling and fail to delivers to go unreported and in the case of FTDs,unpunished. The Commission has identified the following shortcomings with 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. In addition, The Commission explained that short selling volume and transactions data cannot easily explain changes in short interest, exposing a gap between these two types of existing data. Furthermore, these data sets are subject to differences in reporting lag, and can misrepresent the amount of short selling due to mis-marking. 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.