Jul. 20, 2023
Dear Securities and Exchange Commission, I am writing to convey that I strongly support this proposal to prevent evasion of the swap reporting rule and promote transparency through public disclosure of data. For quite some time, I have been concerned about excessively large swaps posing a threat to financial and national stability, as exemplified by cases such as the downfall of Archegos Capital Management. Historically, the derivatives market has sort of been the ‘wild west’ of financial markets. I believe more transparency and oversight will help prevent catastrophes and promote a fair & honest market with healthy price discovery. Furthermore, I want to ask the commission to decrease the threshold to $100 million / $200 million gross to enhance fraud detection. The outlined rule is a good step, but tightening the rule is vital, so multiple actors cannot build a prominent position to evade reporting requirements. I also advocate for the international application of this rule to prevent funds and firms from using borders to evade market regulations. Considering the trader's entire swap portfolio for reporting requirements, rather than individual parts, would provide a comprehensive view of risk appetite and minimize evasion. There also needs to be significant penalties imposed by the SEC to further deter these actions. If the penalty amounts to the “cost of doing business,” then the rule will fail to serve its purpose. Lastly, many comments will say this will hamper the liquidity in the markets and pretend to speak on behalf of retail investors across the country. I am very disappointed in large financial firms and members of Congress who have commented on this bill using such rhetoric. Liquidity, or a potential lack thereof, is not the problem in these markets. However, the lack of transparency, lack of price discovery, and lack of enforcement for new and existing rules is. I commend the SEC for introducing this bill and continue to ask you to represent the true interest of retail investors by implementing new rules and further suggestions from this demographic. I request prompt finalization of this rule. Thank you for your efforts. Sincerely, Hussain Shahabuddin