Jul. 28, 2023
I am a proponent of S7-32-10, which emphasizes the necessity of complete transparency for swap-based securities. This measure aims to create a fair and equitable trading environment for retail investors while also curbing market manipulation strategies. It underscores the importance of regulating the risk exposure posed by different financial entities operating within our markets. Consider a hypothetical scenario where a large financial institution creates a complex swap-based security with underlying assets that are difficult for retail investors to fully comprehend. Without transparency, these retail investors might unknowingly invest in such products, exposing themselves to significant risks they aren't fully aware of. Meanwhile, the financial institution may exploit this lack of transparency to manipulate the market in its favor, leading to potential losses for retail investors. With S7-32-10 in place, regulators can require the financial institution to provide clear and detailed information about the security, ensuring that retail investors can make well-informed decisions. This oversight would not only protect retail investors but also promote a more stable and trustworthy financial market for all participants.