Oct. 31, 2022
October 31, 2022 Dear Chair Gensler, Thank you for taking the time to put this proposal together. Security based swaps and their packaging represent a substantial opportunity for The People to take back the transparency our Founding Fathers envisioned for our great country. I'd like to focus my attention on this rule improving reporting quality on Equity Total Return Swaps. An issue with the current reporting on these instruments is that it can be used to skirt rules related to short selling. The way that it can be abused is that a Hedge Fund \"borrows\" prime brokerage privileges through the swap. The Hedge Fund is not short on its balance sheet but they are effectively short through the exposure of the derivative. The counter-party of the swap is the one who is short the underlying. However, since the broker dealer can short for the sake of liquidity, they do not need to report short interest on the stock by internalizing the orders and selling against their own order flow. Another system failure is something called a \"Portfolio Swap\". This can be described as a basket (group) of Equity Total Return Swaps. If you are looking for an example of this could look like, checkout some of the \"MEME\" tickers. In theory, there's a basket of equities that move in tandem, signaling that some counter-party (or counter-parties) are due on these swaps and that these equities are most likely shorted as a basket through Equity Total Return Swaps. I applaud the Commissions efforts to get clearer and more transparent reporting surrounding swaps and I fully expect Institutional investors to be more than displeased at the thought of this additional requirement. As a retail investor, I would greatly encourage the adoption of this rule. Sincerely, Zachary Reames