Aug. 9, 2024
Hello, and warm greetings to the person on the other side of the screen at the S.E.C. I am writing today regarding SR-FINRA-2024-007, and my thoughts on it. I am a participant in the financial markets in the United States, and, unfortunately, I am becoming more and more leery of my future participation in it. As an investor, some of the most crucial aspects of my decision making in whether or not I participate with my capital is whether or not I am willing to place my money as a form of trust. Trust in a business idea, trust in a company's leadership, trust that both of these aspects are financially sound enough that I believe a financial return will come about, and trust that economic conditions will prevail in such a way that any return of investment that may come, will be able to come to fruition due to a fair and functional market. Unfortunately, I am becoming dissuaded that the last portion, this idea that the United States is a safe place for capital allocation, that its markets are sound and well structured is a rather diminishing belief. I wish to say at this time, that there are trends that are encouraging, that the United States, and the S.E.C as a governing body for us, is trying to stabilize some weaknesses in the market. As such, I am expressing my support for the proposed FINRA Rule 6500 Series regarding the Securities Lending and Transparency Engine (SLATE), which would require the reporting of securities loans and would reveal that loan information. If you want individuals to trust the market, to believe it is worth participating in and that there are no preordained winners and losers, it is important to allow access to this information to flow to those who would be considering being participants in your markets. People want to know if a market is well regulated, and if there are risks accumulating in the system that would weaken their prospects of being willing to place their money into such a system. As far as the suggestion the markets should allow FINRA, in consultation with the S.E.C, to suspend the reporting, or, to restrict access of certain Covered Securities Loans or Data Elements when they viewed it "necessary," this comes off to me, as though FINRA, or the S.E.C, would be taking action to favor some vested companies and organizations, to benefit them in the outcome of a trade and not others. Use of this provision would undermine the very transparency that Rule 6500 aims to promote. The suspension of reporting would inadvertently create an information asymmetry, thus disadvantaging end borrowers and beneficial owners who rely on this data for making prudent investment decisions.Making it seem as though, FINRA, and, the S.E.C is promoting the interests of some market makers/participants, and are willing to place other market participants at a disadvantage, being willing to cater to the business interests of some stakeholders for one reason or another. This type of action is what leads me to believe the American markets are faltering and may no longer be a safe place to keep financial assets. The SEC's Adopting Release for SEA Rule 10c-1a emphasized that increased transparency in the securities lending market would help alleviate the information disadvantage faced by various market participants, improve price discovery, and reduce costs associated with market condition monitoring. If this is truly the goal then such exemptions stand in opposition to such a stated aim. Transparency in securities lending is essential for the effective functioning of financial markets. It mitigates systemic risk by providing market participants with critical information that helps in assessing the liquidity and counterparty risk associated with securities loans. Furthermore, transparency aids in the protection of investors by ensuring that they are adequately informed about the terms of securities loans and the parties involved. The requirement to report comprehensive data elements such as the legal name of the security issuer, LEI, security symbols (CUSIP, ISIN, FIGI), transaction dates and times, settlement dates, loan amounts, and details concerning collateral underscores the importance of detailed reporting in maintaining a fair and orderly market. These measures enhance the capacity of all market participants to make informed decisions, thereby fostering a competitive and equitable trading environment. In conclusion, while I broadly support the implementation of FINRA Rule 6500 Series for its potential to enhance market fairness and protect investors through improved transparency, I strongly advocate for stringent guidelines governing the suspension of reporting requirements to avoid undermining these goals. Sincerely, Someone who is debating whether or not they will continue to invest in American markets