September 17, 2008
Although the intent of Reg SHO was admirable, the concept was flawed.
The root of the problem lies with DTC & NSCC not with the Broker/Dealers.
Broker/Dealers have little if no control over delivery.
The rule increased the Broker/Dealer costs of execution which was passed through to the customer. To the Broker/Dealer, Reg SHO is like asking the gas station attendant to monitor speeders. Simply put, if the rules already in place had been enforced, there likely would not be a problem. Reg SHO should be abolished and replace with stringent enforcement of current settlement procedures.