August 7, 2006
Thank you for soliciting individual investor comments regarding Reg SHO. I submit that the SEC should:
1. Eliminate the Grandfather Clause
2. Narrow the market maker exception (options market makers)
3. A "pre-borrow" for short sales should be required
Tweaking "locate" rules as in REG SHO, with a bunch of exceptions is not going to guarantee actual "delivery" of securities in the future - which is the main point. We want delivery with no exceptions. Tweaking exceptions is chasing problems and creating new one in the future, which would lead to more tweaking on an indefinite basis. Nothing short of a universal delivery requirement will put a stop to delivery failures. Period.
The data quoted in the foot notes does not include either unreported ex-clearing FTDs nor the misuse of security entitlements that harm the price of securities as well.