Apr. 20, 2022
Good day, The following is my comment for File Number SR-NSCC-2022-003: I'm extremely disconcerted by the proposed rule change and feel that it undermines everything about our allegedly free market. This rule would increase avoidance of true market price discovery through onward lending and provide an avenue for market makers to secure a short position in a company with exponentially mitigated risk. Removing risk from short selling, and specifically providing another avenue for Failure to Delivers to never actually be delivered sounds so asinine I wouldn't possibly believe that the SEC is legitimately considering this rule, except for the fact that other iterations of this rule have been proposed before. If the SEC is designed to ensure that our markets stay fair and free, how could you possibly justify a system wherein breaking the law (failing to deliver on a stock that should have already been legitimately owned) warrants a rule to encourage the behavior further? Not to mention that there are other avenues already for FTD to be overlooked (i.e. continually buying cheap option contracts to kick the can down the road, so to speak). Imagine the following situation: I own a car dealership. I list a car on my website and a customer purchases that car. I take their money and tell them, whoops, looks like I don't actually own that car. The consumer contacts the police to say, "Hey, they can't do that! I want my money back!" Well, I can. I just have to show them I own another car and they can't do anything for the poor consumer I just scammed. If this rule passes I will be shocked that any publicly traded company wouldn't jump ship from the DTCC immediately for fear that their stock gets bombarded by an infinite supply of naked shares flooding the market diluting its value with seemingly zero legal repercussions and backing by the SEC. Please consider the average retail investor and the companies who would suffer from this change. Thank you for your time, Patrick