April 20, 2022
The following is my comment for File Number SR-NSCC-2022-003:
The SEC goal of fair and efficient markets is severly hurt by this rule. This rule tips the scales significantly in favor of institutional market participants and hedge funds and against the retail or the long investor who wish to build capital through investing. An efficient market shouldn't need a convoluted rule to promote naked short selling and structural Fails To Deliver as a strategy. This rule promotes and encourages naked short selling through equities lending and purposeful failure to deliver that drains capital from the markets only to benefit the big players who deal unethically.
This rule disrupts the risk assessment that a trader must undergo when making a trade. True risk is obfuscated and transferred from the risk takers to the common investors. I can only picture more risk and more leveraged risk to come from such a biased and unfair rule. Naked short selling is illegal but it still exists to some extent. This rule would make that illegal activity more appealing to those that are not currently breaking the rules by giving an easy way out on fails to deliver securities.
Reg SHO was meant to increase transparency and accountability for large financial institutions including banks and broker dealers and this rule runs completely counter to the spirit of Reg SHO.
Common investors, retail investors, those with pensions and 401Ks would be hurt by this rule that only favors the large hedge funds. I will be sending a copy of this comment to my Congressional Representatives so it is given the level of visibility that it requires because it hurts fair and efficient markets and needs to be withdrawn.
Thank you for your attention,
DMR