Aug. 13, 2023
Hello, The argument proffered by detractors of the proposed rule appears to boil down to the following: “We should be able to have invisible corners of the market in which to trade derivative positions that affect the underlying securities and their owners, but which retail participants in the markets shouldn’t know about.” That position would be opposed to SEC’s mandate to maintain fair and equitable markets. The issue of “speed of information” is altogether different than the question of whether that info is made available at all. Those competing with paid tiers of info and high-frequency trading hardware can still gain an edge due to their ability to purchase and employ such systems. However those unable to use such systems should still be able to gather ALL available information about a security even if delayed prior to purchase in order to make a truly informed decision. As a crude example, currently investors will study company financial statements, macroeconomic trends, and options chains to determine whether it makes sense to buy into a position or sell off an existing one. But if financial institutions are allowed to have hidden positions via swaps and other non-reported derivatives, the sum of all information available to the trader/investor becomes meaningless as the true state of longs/shorts is hidden. This is worse when one considers that derivative positions themselves can often outweigh and move the security by orders of magnitude than what the publicly known data would indicate. Said differently, institutions wishing to create speculative bets should perhaps be able to do so in secret, but not in ways attached to markets where the outcome of those bets affects the underlying. It would be akin to allowing the side bets of horse races to affect the actual winners and losers of the race. The public, who purchased the security, should be able to know about the existence of any bet, one that has the ability to make or break their investment made using what they thought was publicly available info on its entirety. Thank you, Michael