April 20, 2022
I, as a retail investor, am concerned by the nature of this rule and believe it should not be passed under any circumstances.
This rule, seems to soften the potential downside for abusive short selling. In the case a grossly over-leveraged entity cannot meet margin calls, this seems to give them a parachute if you will, to help them unwind their position without facing the consequences of their risky actions. If we remove the consequence of egregious risk taking, then the risks will continue, and potentially accelerate, potentiall leading to more \"great depressions\", and \"housing crashes\", albeit via possibly different exposures (i.e. loan debt, etc).
Rather than create new vehicles like SFTs to be placeholders for securities, introducing yet another layer of plumbing of what I consider to be an extremely complicated system ... why don't you address the cause of the problem these SFTs are supposedly here to alleviate. Namely, how and why entities find themselves so completely overleveraged in the first place. Or why Fail to Delivers occur with such regularity.
This feels like a band-aid of complexity that treats a wound that requires stiches, but no one wants to sew it up. Furthermore, it feels like an unnecessary new layer of complexity, which advanced players in Wall Street, Investment Banks, Hedge Funds, will leverage against the comparatively less articulate retail investor.
The SEC mandate is to protect retail investor who often fall prey to wall street players who know how to get the most advantage out of an extremely (and I argue unnecessarily) complex system. I believe the SEC should be working to making our markets more retail friendly, instead of making it more complicated and therefore less accessible for the average investor. Further more, the SEC should not introduce rules that make risky investment behavior more accessible and less consequential for those that choose to behave this way.
Please do not pass this rule.