Apr. 20, 2022
To whom it does concern, I am a retail investor, and would like to make my thoughts about this proposed rule known. This rule flies in the face of fair market mechanics, and gives unlimited power and scope to bad actors who would abuse such mechanics. It is set in place to "alleviate Fail To Delivers", but in action does nothing to eliminate them, and in effect protects the action of naked short selling, which is ALREADY ILLEGAL. This rule leverages the complexity of financial vehicles to put power in the hands of institutions, effectively safe-guarding them from their own bad bets. Passing this new rule would only further deteriorate the American public's faith in a "free and fair market". I urge you to withdraw this proposal immediately. This rule proposes using a vehicle, they call an SFT (Securities Financial Transaction ... sigh), as a placeholder for any securities transaction. As I understand it, these SFTs are fungible like a dollar bill. So, if you have 100 worth of SFT that you SHORTED, and want to Fail to Deliver rather than buy-in at market value, you can resolve it by utilizing another SFT worth the same amount set for the same delivery date. The cost one would pay for this "feature" would be based on the difference in closing price from one day to the next. This cost would be much cheaper than a market buy-in, especially when a security is trading under extraordinary circumstances and elevated prices. Seems like a cheap way to can-kick a frightening FTD problem (especially one particular idiosyncratic security which carries significant system risk), rather than buy-in at current market value. I.e. seems crafted to protect the practice of abusive short-selling, when it doesn't work out for Short Hedge Funds or other major market participants. This is not acceptable and creates an opportunity to harm retail investors and it violates our rights for a free and fair market. Please do not allow SFTs (Security Financial Transactions) proposed in this rule, to create new and potentially endless layers of can-kicking to be allowed, whereby the very real financial obligations of the FTDs get passed along instead of settled. It allows for abusive practices where market makers are never accountable for their failings. NSCC understands that SFTs provide liquidity to markets and facilitates the ability of market participants to make delivery on short-sales, and thereby avoid failures to deliver, ‘‘naked’’ shorts, and similar situations. On a typical Business Day, The Depository Trust Company (‘‘DTC’’), an NSCC affiliate, processes deliver orders related to securities lending transactions on securities having a value of approximately $150 billion. Please remove this proposed rule and furthermore please do not try to propose something similar again in the future, as iterations of this have been rejected in the past and continue to be rejected by educated investors every time they resurface. What a colossal waste of time, mine and yours, to continue to have to repeat this song and dance over and over again. The mission of the SEC is to look out for the well-being of investors such as myself, so I would propose that you direct your attention to doing so. Thank you in advance for your timely attention to this matter, and please live up to your obligations and help the investors from predatory behavior by financial institutions. Sincerely, A Concerned and Disturbed Investor