Apr. 20, 2022
I'm a retail investor and have recently come to some understanding of this rule proposal. This rule is requesting the NSCC be allowed to prevent liquidation from the consistent Failure to Delivers that the NSCC has already acknowledged, but would instead allow the NSCC to step in and replace the prior obligations that borrowers have with additional lending of securities from the NSCC itself. Effectively, any borrower who fails to deliver shares will have the NSCC step in and replace their existing obligations, and lend more shares in return further worsening the problem they claim to address. This will allow for a continued worsening of the naked short and failure to deliver (FTD) problem that many firms are experiencing by giving a replacement for firms that fail to provide assets that they have promised. The NSCC has previously allowed firms to effectively pay off their existing credit cards by putting them on another credit card (through the process of continued borrowing of shares when they have failed to deliver and allowing agencies to answer those failures with other borrowed shares which they are now at risk of not being able to deliver). With this rule, agencies would no longer be held responsible for their failures to deliver - they would no longer need to pay off a credit card with their next card, they could ignore it entirely. This rule would completely obviate market makers from accountability for risky or unlawful business practices. It would allow for more layers of passing obligations instead of meeting them and could prevent obligations from ever needing to be met because of the ability of market makers to generate shares for free. This rule is an attempt to give market makers the ability to print shares, effectively printing money, with no consequences. Market forces all require accountability to balance and function, and this rule would undermine any accountability market makers face. These proposed rule changes would freely allow the generation of naked shorts and and allow for FTDs without fear of consequence. This would be destabilizing to the markets and would not benefit anybody outside of hedge funds that intend illegal activities. Please remove this proposed rule. Multipleiterations of this have been rejected in the past and continue to be rejected by educated investors every time they resurface. The suggestions are dangerous on a market level. Thank you,