August 19, 2014
ID: SEC-2014-1295-0001
SR-NASDAQ-2014-072
34-72684 Jul. 28, 2014 Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Disclose Publicly the Sources of Data Used for Exchange Functions
Comments due: August 22, 2014
dodd frank principles:
Markets should be transparent.
Regulation should be consistent, without gaps that can be exploited by those who wish to indulge in risky,
destabilizing or illegal behavior.
Market participants, not taxpayers, should bear the risks of their market activities.
And regulators should have the willingness and the tools they need to apply these principles to the day-to-
day workings of the financial markets.
The Dodd-Frank Act translated these principles into law that is the foundation for effective regulation.
http://blogs.law.harvard.edu/corpgov/2012/11/16/dodd-frank-principles-and-provisions/
these principles are violated by this rule filing in a rather wholesale manner.
NASDAQ depends on an unreferenced 2011 filing to make this filing. such a reference does not disclose
practices, order types or order routing. this violates transparency. if NASDAQ advantages marketmakers and
brokers by providing different order types than the retail/institutional investors can use, then this
violates the idea of a fair marketplace.
providing connectivity to certain premium customers which advantages those customers with the speed to read
orders submitted by non-premium customers introduces a marketplace bias.
the idea that NASDAQ can detect regSHO violations is a joke. regSHO depends on accurate data and NASDAQ does
not submit accurate data. they might not even receive accurate data from brokers and marketmakers. many
orders placed on NASDAQ are anonymous and may not even disclose whether an order is short or long. as far as
i can see, while there are qualifications for marketmakers, there is no disqualification for marketmaking
status.
as you can see from the picture, courtesy of markit, shares might be borrowed only at the time of broker audits. since broker audits occur only once every 3 months, it appears to me that there might be a lot of naked shortselling in the market. NASDAQ is one of the enablers of this practice because they do not require that brokers or marketmakers disclose their order positions. perhaps they allow anonymity to shield market participants./
in other words, investors must obey rules but brokers and marketmakers do not have to obey rules.