Aug. 16, 2022
August 16, 2022
Allowing the proposed rule to go through will greatly increase transparency in the US stock markets and allow for nefarious players in the market to be identified more easily. This rule would benefit retail by providing them with more information to base investing strategies off of. The SEC would be benefitted by having access to more data to allow for more efficient regulation and policy-proposing for US markets. This in turn could also improve market sentiment from foreign investors as well due to the increased transparency.
It would not be too hard for financial institutions to implement this as it could be a simple SQL database where the securities lenders just enter the essential loan information (recipient, time, security, amount, value) into the database and give the SEC permission to access said database. Considering most trading is already computerized today, this could all be done by adding a few lines of code to existing computerized lending systems. For non-computerized lending systems, it would just require a lender to enter that same essential information into either a SQL terminal or a connected spreadsheet.
Security lending is a driving factor in growing negative market sentiment among investors recently. Across social media and main stream media there has been multiple reports and evidence suggesting there are at least some nefarious players in the security lending market that may be adding great risk to US markets. The implementation of this rule would benefit everyone except for market players who are abusing security lending.