April 20, 2022
This proposal is going in the wrong direction. Just like laws written by congress it, and they, include too many moving parts. A rule change should be simple and focus on one change at a time. This does not. The part of this proposal I find troubling is the part where agents are swapping securities for money for a short duration. Some reasons they give may be valid and without malicious intent, but anything that allows an agent to swap things for the appearance of being covered, when they in fact are not, is just terribly irresponsible. Its the equivalent of a Ponzi scheme. Turns out theres already a market mechanism for swapping securities for cash and its called the exchange. But if two parties need to hold a quantity of a security they should actually own them, not pass them back and forth to give the appearance that each is covered even though only half the shares actually exist. Thats how the market is supposed to work. Instead, right now it seems that market agents are in the habit of promising a security for cash, taking the cash, and failing to acquire the security. There are mechanisms that allow these failures to deliver to persist and that should be illegal and punishable by fines well above the highest value of shares in question, as well as jail time. These things are avoidable if theres incentive to avoid them. We already have a margin crisis, and this just expands upon that. Do not approve this proposal