April 20, 2022
NSCC-2022-801 is a crime against fair markets. Essentially, it is creating a derivative used to deleverage a security from its price discovery by providing a vehicle for risk to be held in the form of dollars rather than shares. This allows market makers and primary brokers to lend shares out in excess of the number of shares issued for fees, and not hold them responsible when they fail to deliver the shares that they sold to retail on an illiquid stock. This essentially allows for infinite shares to be sold short against a company, while allowing a loophole to have those shares be delivered with dollars and not shares. This prevents price discovery on the upside, cause none of those shares would be rebought, and just the differences between prices repaid. This is criminal. It breaks the continuity of market mechanics for price discovery, and discriminates against retail investors.