Aug. 16, 2022
August 16, 2022 The proposed S7-18-21 Reporting of Securities Loans would vastly improve the transparency and proper function of our markets. Currently, bulk reporting allows funds and companies to hide their real positions within the aggregate. There exist major risks to both companies and markets as a whole that cannot be identified within the current reporting framework. By requiring transaction by transaction reporting every 15 minutes, the SEC would be better able to identify fraud and systemic risk. This would allow the SEC to stop dangerous chain reactions in derivative obligations that could have vast macroeconomic effects. Moreover, increased transparency to the public would allow retail investors to report systemic risks that the SEC itself may not notice, at no cost to the commission. The fact that large short positions can go unreported (or hidden in aggregate reporting) presents dangers to public companies, their employees, and those who have invested their savings in said companies. For the funds and companies affected by this proposal, the cost of accountability and proper transparency should be a cost of doing business. SEC fines for misreporting should NOT be a cost of doing business. They should have material negative effects on those entities. I am encouraged by recent SEC enforcements but hope to see stronger penalties for companies acting in bad faith.