Apr. 20, 2022
To whom it May Concern, As a middle-class retail investor, reading the content of this proposed rule disturbed me greatly. By my understanding, this proposed rule would allow Failures to Deliver (FTDs) to continue and to grow as problem. FTD can, and seemingly are, abused by market makers in conjunction with illegal naked short selling and coupled with the abusive dark pool trade routing highlighted by SEC Chairman Gary Gensler, allows market makers to control and suppress prices on security trading. This in no way benefits investors, particularly retail investors, and such abuses are contrary to the SEC’s role in maintaining a free and fair market. Allowing the Security Financial Transactions (SFTs) proposed in this rule would create opportunities for endless can-kicking when it comes to FTDs, allowing these financial obligations to never be settled, merely passed along ad infinitum. While this might provide stability at the moment, it allows market makers to continue their abusive practices and never be held accountable for their poor trades or other failings. In a purported ‘free and fair market’ this is an unacceptable situation; it creates opportunities for large financial institutions to harm retail investors and violates not only our right to a free and fair market, but also the appearance of the US markets being free and fair at all. For the good of the markets, international perception of US financial markets, and retail investors, the manipulation must come to an end – not merely be kicked down the road until the end of time. By my understanding, this will be the third time such a rule, or a very similar rule, has been proposed. The previous two times, the rule was rejected by a growing class of well-educated investors. I ask you to consider the best interests of retail investors, and heed our collective rejection of this rule, no matter how it is phrased, and no matter when it is proposed. Submitting a rule once is all well and good, that is what we expect from the SEC. Submitting the same rule a second time, with some changes, is fine, after all, maybe sentiment has changed. But to submit essentially the same rule three times in less than two years, with no substantiative changes to the text or purpose, each time collecting and reviewing public comments – this begins to look like a waste of time, both by the SEC and by the investors who must comment on each rule lest a rule twice rejected be approved due to collective apathy. I’m certain I need not remind you that the role of the SEC is to concern themselves with the well-being of all investors – not merely the market makers and other large institutions. I would propose that you take a look at your mission statement to remind yourselves that “The mission of the SEC is to protect investors; maintain fair, orderly, and efficient markets…”. SR-NSCC-2022-003 does not protect retail investors. SR-NSCC-2022-003 will not create or maintain a fair market, nor even the illusion of one. For the good of retail investors in American markets, both in the US and internationally, I urge you to reject this proposed rule, as it was rejected twice before. Finally, though it might not be relevant to this particular proposed rule, there are two areas where the SEC could act to “protect investors” and “maintain fair, orderly, and efficient markets”. Firstly, the SEC could follow the lead of the European Securities and Markets Authority (ESMA) and ban Payment for Order Flow (PFOF). This practice is inherently harmful to retail investors who have their orders front-run by market makers and other large participants for their own direct benefit. Secondly, the SEC could take action to regulate dark pool abuse. As pointed out by Chairman Gensler in August of 2021, nearly 40% (at the time) of orders are executed off-exchange. The SEC could restore fairness, and the appearance of fairness, to American markets by mandating that off-exchange trading be used for its intended purpose – purchasing large blocs of shares, not sending all sell orders to lit exchanges and all buy orders to dark pools, regardless of size, in order to manipulate security prices. I would like to thank you in advance for your prompt attention to this matter, and I hope again that you will consider the SEC’s mission statement and live up to your obligations to protect investors from the increasingly predatory behavior all too common from American financial institutions. Sincerely, Nicolas Gibney