April 20, 2022
Greetings,
As an American retail investor who believes that participating in Americas financial markets should offer everyone an equal opportunity to build wealth and to support companies that they believe in, I am extremely concerned and disheartened by the familiar content of this new proposed rule. The rule would effectively allow for Failure To Delivers (FTDs), a well documented and pervasive issue in our markets, to not only continue but to grow even worse. FTDs can be abused by market makers and used in conjunction with naked shorting and dark pool trade routing to manipulate and suppress the price of equities for the benefit of the market maker and other institutions with similar financial interests. In no way does this proposed rule benefit investors nor does it benefit the companies they invest in, rather, it is likely to cause greater detriment to them than the current pileup of FTDs already has.
I urge you prevent Security Financial Transactions from enabling new methods of negligence, whereby the financial obligations of FTDs get passed along indefinitely instead of being settled as they should. This proposed rule is a shorted-sighted bandaid solution in its attempt to create a false sense of stability. It will perpetuate the abusive practices of market makers who are not held accountable for their actions nor failings already. The opportunity it presents for them to continue harming retail investors without ramifications and violating our right to a free and fair market is unjust and unacceptable. It is the duty of our regulators to stop this type of predatory behavior and hold market makers and financial institutions responsible for their financial obligations - as hundreds of millions of ordinary Americans and participants in American capital markets are each day - regardless of the short or long term consequences they face. Failure to condemn what this rule proposes is tantamount to endorsing it.
I sincerely request that this proposed rule be denied with prejudice, as iterations of this rule have been rejected in the past and continue to be rejected by educated investors every time they resurface. The repeated attempts for such a measure to be passed after multiple rejections may point to the desire for continued malpractice by market makers, or reveal an urgent need to escape a dangerous situation that malpractice has already created. Whichever the case may be, what is clear is that this rule is an attempt to fix a leaky faucet in a burning building.
Thank you for your time and consideration of my comment. I implore you to honor your obligation to protect investors and businesses from predatory, reckless behavior by our financial institutions