Aug. 17, 2022
My name is Erick Nunez, and I am a retail investor that is in support of File No. S7-18-21 . I am writing to the SEC in response to CItadel securities comment that was posted on April 4 2022. Citadel is claiming that the new rule File No. S7-18-21 will hurt Citadels ability to make money with short selling securities. To support my statement I will provide a quote from citadel securities: "To the extent the Commission intended to propose requiring public reporting of Short Sale Linked Activity, it would transform the proposed securities lending disclosure regime into a transaction-by-transaction sholi sale public reporting regime. This would raise a number of concerns that the Commission did not adequately consider, including increasing the costs associated with establishing sho1t positions, facilitating the copycatting of investment and trading strategies, disincentivizing fundamental research, and impairing price discovery, liquidity and market efficiency. All of these consequences of the Proposal will impede the ability of fund managers to continue to deliver superior risk-adjusted returns for investors." Won't someone think of the poor fund managers whose risk adjusted returns are impacted? Frankly, I do not care that Citadel securities ability to make money while processing short sale orders. I can not think of any other business where something that is lent out does not have a due date for a return. Citadel does not represent retail investors, my reasoning for this statement is simple. Retail investors want more transparent markets. Failure to delivers being created by market makers like citadel securities serve to further keep retail investors in the dark by self reporting their short sale orders on securities. I would like to also point out that when citadel is caught breaking the law by misreporting their numbers the fines that they recieve are not severe enough to enforce change. If the punishment for breaking the law is an inconsequential fine, then that law only serves to penalize the poor. File No. S7-18-21 is a step in the right direction, but real reform in securities lending must include notifying the public who is borrowing or lending shares. There must also be a due date that the loaned shares must be returned. The fact that under the current rules a share can be borrowed for a short sale indefinitely is appalling. I would like to end with a quote from Susan Trimbath that echos my feelings on the matter of unregulated short selling. "The disclosure of lending inventory and near-real-time position reporting will only make it possible for broker-dealers to discriminate against companies who are already bearing an onslaught of phantom shares in capital markets."