April 20, 2022
I strongly oppose this rule.
This rule change to allow Securities Financing Transaction is the equivalent of asking the SEC to give market makers, banks, brokers, and large funds permission to hide fraudulent lending and counterfeiting of securities. A Securities Financing Transaction is an intentionally complex vehicle to remove the consequences of failing to deliver a security. A free-market should not be allowing failures to deliver in any circumstance. When a market maker fails to deliver because they were \"providing liquidity\" and later unable to locate shares, they defraud investors and the entity the security represents. Now we have a rule proposal that asks to further defraud investors by conducting a transaction off of the open market with only a tangential relation to the actual value of the security via the current market price. At this point, that market price is already an invalid metric due to the direct action of failing to deliver the very same security. Fortunately there is a way to get true price discover and clear out the obligations that the Securities Financing Transaction is trying to hide. Force delivery of securities buy going to the open market and buying them as promised in the first place. Liquidity issues will solve themselves when the price of the security increases. As price goes up, there will be more willing sellers that solve any liquidity problems while finally allowing true price discovery.
In summary, this is a rule for that will only further defraud investors and publicly traded companies so it must not be implemented.