April 20, 2022
This proposed rule is designed to look as if it resolves net settlement for market participants, but truly only serves as a way for bad actors within the market place, to effectively can kick failures to deliver indefinitely, as a result of abusive naked short selling.
These naked short selling practises are already illegal, so by allowing this rule to be implemented, will only result in more rampant use of these illegal practises.
Allowing market participants effectively avoid their delivery obligations just creates an unbalanced marketplace which is in favour of abusive short selling and facilitating illegal activities.
This is effectively the second time this rule has been proposed and is obviously designed to protect market makers/hedge funds who have outstanding short positions which have caused them to become over leveraged. If market participants cannot deliver the security, they must buy this security on a lit exchange and deliver said security as per THE RULES. Removing this obligation and replacing with a just supply whatever you want at equal value is not an effective solution to anything other than allowing distortion of any kind of settlement.
I would hope that members of the SEC would actually work to create a fair market and not create a biased scenario in which the rules are changed and goal posts moved to benefit those who have painted themselves into a corner, as a result of their own greed.
You should be focusing on creating a t+0 settlement requirement and remove the ability to sell short on securities without holding a married long position.