April 20, 2022
Please have it noted here that I fully oppose any proposed remedy that will, in the future or retroactively, make activist short-selling safer for hedge funds or investors in the name of \"market stability\". This proposed rule is a slap in the face to those investors who for more than a year have pled with the SEC for a fairer market with more transparency, especially as it relates to short selling.
If anything, such a policy will only serve to further erode the investors' confidence in the legitimacy of the market, true price discovery, and fair market activity. To insulate only select parties from the consequences of malfeasance or poor judgement is a theft of opportunity from those who at the same time take a counter position of honesty and thrift. By allowing these allegedly equitable swaps to take the place of true settlement and closure, this policy will only encourage future abuse of the already fragile system. Furthermore, without adequate and accurate price discovery, which this proposed rule erodes, in no way can the exchange of a debt of one security for another be deemed an adequate substitution, even if those securities presently hold the same market value.
While it will assuredly reduce some volatility, it will only serve as a thumb in the dam, behind which will be an enormous house of cards built up. When it inevitably comes crashing down in the subsequent market failure, the depth and devastation caused will ultimately kill all of what little veneer of legitimacy the market has left.