December 16, 2021
Without access to the information discussed in this rule, it seems functionally impossible for the SEC to understand what level of systemic risk the markets have created until everything collapses. How many securities are lent out? Who is lending? Do they even own what they've lent?
The \"formation of capital\" cannot be protected through retrospect alone. Allowing these positions to accumulate in secret only reinforces the benefits of ever-increasing risk. You cannot manage what you don't measure, and securities lending is so ubiquitous in the markets today that a piecemeal reporting scheme will hardly offer any significant understanding of the current systemic risks in the market. When the market takes on too much risk and collapses under its own weight again, astronomical amounts of capital will simply vanish as bad debts float to the surface.
If we want to even attempt to \"protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation\" then the SEC needs to at least know what's happening in the markets. If there's not already a clear, complete reporting structure of these basic transactions then the SEC is pointlessly hamstrung.
Much of this reporting, if not all of it, should be extremely easy to automate. Any argument about the difficulty of reporting these transactions to the SEC seems pretty pathetic. It should be a pretty minor software update, nothing more. If it is particularly difficult then I have to wonder how wildly disjointed these books must be and why any financial institution would tolerate having so little understanding of their own financial status.