Apr. 22, 2022
To whom it may concern, The proposed filing is an egregious attempt by institutional hedge funds and incumbent market participants to escape responsibility for wild over leveraging in the market and in particular in the last two years. If one of the key facets of the market, is that it is fair, then the filing utterly fails to accomplish this for several reasons. 1. The filing claims that it will prevent FTDs and Naked Shorts. I highly doubt this will be the case but rather what it will do is hide FTD data and stock loan data from investors. The DTCC/NSCC would only be creating a new method by which party and counter-party might rehypothicate shares. We know currently and historically that the DTCC/NSCC stock loan program is abused rampantly, especially by hedge funds. Furthermore that the DTCC/NSCC is aware of this and fails to take any action. 2. The filing fails to address transparency for investors to understand what is happening with SFT transactions. The document does not at all discuss any reporting, any transparency which would adequately provide investors confidence. 3. The filing, in describing a methodology to prevent fire sale situations, is not trying to be proactive, but rather reactive wherein hedge funds and institutions have made bad investments, such as stock shorting and are now facing the music. It is a blatant, crass attempt to sell investors the idea of protection, when all it does is allow these firms off the hook when they have made exceptionally bad trades. That is not fair, in essence these firms would be able to continue to short stocks, without regard, supported by the DTCC/NSCC and if, should the short sale turn negative for them, simply allow them an out. No such situation exists for other market investors and it represents an unfair advantage. We need only look at $XRT as an example wherein the short interest of the stock is over %1000 percent, there are many notable other situations, such as $HYMC where ownership currently stands at %108 from the top 5 holders. 4. While claiming that the filing will improve liquidity, liquidity is not the problem. Abusive short selling, naked shorting, and failure to properly address loopholes in T+35 settlement play a much larger role. The utilization of the term liquidity in the document is meant only as a method by which institutions and hedge funds might continue abusive market behavior without having to own, cover, or in any way have issues in finding available stock. 5. The filing is a rehash of NSCC-2021-010, which in and of itself, is a rehash of an older filing. These were removed, as being too complex to implement by the DTCC/NSCC and yet we now see once again, another equally complex filing, yet somehow are led to believe that the DTCC/NSCC can now implement it. The market up until 2021 did not care, nor need an SFT for securities and especially not one which includes fire sale provisions to protect institutions and hedge funds primarily. This filing represents an attempt by these firms to escape responsibility for massively bad trades that if at any point risk management had been involved, would have prevented in the first place. To allow these firms to fundamentally escape without consequence for poor decision making, is not fairly representative, as an investor, I accept inherent risk in the market when I place trades, if it does not go the way I think it should and I lose money, there is absolutely no similar function by the DTCC/NSCC which would protect me.