April 20, 2022
I am submitting this comment as a retail investor. I believe that this new rule is against the interests of retail investors, and in fact most upstanding investors who operate legally and follow the rules, retail or otherwise.
This rule would remove almost all of the risk associated with illegal naked shorting (which still happens, but currently carries significant risk in addition to being illegal). Many institutional investors already blatantly ignore that naked shorting is illegal, and with this rule in place, the last big incentive to not naked short would be removed. There would be rampant naked shorting, and severe suppression of natural price discovery, to great detriment of retail investors and the companies unfortunate enough to have their stock targeted for naked shorting. All this rule does is further incentivize illegal practices that harm everyone other than the institutions doing them. It does nothing to improve the markets or make them more fair, it makes them less fair.
Naked shorting is already a significant problem that has greatly shaken my faith in the fairness of our markets, and this rule would make it exponentially worse. I strongly urge you to reconsider this rule.