Oct. 30, 2022
October 30, 2022 There is no reason for securities lending to be still so purposely opaque. In spite of the risks exhibited in the Archegos drama, securities lending still seems practically unregulated. Who is monitoring the prime brokers who have financial incentives to lend more shares of a security than exists? Or facilitating naked short selling exhibited in securities like Overstock? It seems that if naked short selling truely is illegal, then there needs to be oversight on the lenders and market makers who would facilitate this criminality. There also needs to be oversight on the DTCC as they could be overburdened with all their many duties, thus allowing rule breaking to slip through. Securities lending should be disclosed to the public daily, blockchain should be implemented to ensure fidelity to supply and demand. It's already been proven to work as a digital ledger system that facilitates market making by impartial public algorithms. The stock market could easily implement a ledger which could eliminate stock over-lending and naked short selling entirely . Lenders who abuse their privilege should be punished harshly as should naked short sellers as the investors who's savings go into these markets are the victims of these schemes. Overseas securities lending should have disclosures as well and the SEC needs to collaborate with securities oversight in other countries to stop the practice of offshoring. Failure to delivers need to be stamped out full stop, it is a disgrace to see market makers rake in profits while FTD's pop up in practically every security. Clearly many market participants treat the settlement cycle as a tool and the SEC as a joke. T + 0 is easily achieved in cryptocurrency, a mock market of pretend money. Surely the stock market can do better. Lastly I propose market maker firms having no further place. For profit market making has obvious conflicts of interest which ends up resulting in naked short sellers being facilitated. This is prevalent in the options market. The securities lending side of the market needs to be under much more scrutiny with the amount of risks they can pose to our markets as a whole.