March 10, 2022
Transparency surrounding securities lending is vital to market integrity and the effectiveness of enforcement offices like the SEC. Repeated rehypothecation of assets is a massive problem plaguing our markets and presents substantial risk to market health and stability.
In order to ensure a valid \"chain of custody\" regarding financial assets, it is critical that this information is reported to and monitored by the SEC. Our current market struggles from rampant duplication of securities, which in many cases, leaves financial institutions \"hollowed out\": Meaning their balance sheets reflect massive totals, but should those credits and debts need to be \"unwound\" the misuse of excessive duplication through lending would present catastrophic issues.
The fact that this information is not readily available to the SEC should be concerning to every well-intentioned market participant.
Moreover this issue and need for legislation regarding it present a strong case for a blockchain-based market backbone. Although, I of course recognize that such migrations take considerable effort and that is much outside the scope of S7-18-21.
As a retail-investor I urge the immediate adoption of S7-18-21 and encourage the SEC to continue to craft legislation that champions market transparency.