Apr. 19, 2022
To whom it may concern at the SEC, The complexity of rules that govern our fair market, are not created by retail, rather by wall street, big banks, and hedge funds, and they use the complexity to their advantage. This rule is just another example of leveraging complexity to fleece over retail by keeping them ignorant. The NSCC explicitly “understands” that there are significant FTDs, Naked Shorts and similar that need to be cleared. This rule proposes a service to “avoid” those pesky obligations. It does so by introducing a new transaction layer that “novates” (replaces) old obligations b/w NSCC member lender / short sellers / prime brokers / etc. with a new obligation b/w a member and the NSCC itself as the new counterparty. This novation is done with even more lending of securities. SR-NSCC-2022-801 is the new SR-NSCC-2021-010 (which was withdrawn already). This rule proposes using a vehicle, they call an SFT (Securities Financial Transaction), as a placeholder for any securities transaction. As I understand it, these SFTs are fungible like a dollar bill. So, if you have 100 worth of SFT that you SHORTED, and want to Fail to Deliver rather than buy-in at market value, you can resolve it by utilizing another SFT worth the same amount set for the same delivery date. The cost one would pay for this "feature" would be based on the difference in closing price from one day to the next. This cost would be much cheaper than a market buy-in, especially when the floor for a security is high. Seems like a cheap way to can-kick a scary-ass FTD problem (idiosyncratic risk?), rather than buy-in at current market value. Was this crafted to protect the practice of abusive short-selling, when it doesn't work out for the SHF? Thank you for taking the time to read this email. Barry Trujillo Concerned Retail Investor