Feb. 5, 2024
To whom it may concern, I am writing to express my strong opposition to the recent proposal by the Securities and Exchange Commission (SEC) to reduce margin requirements in times of market volatility. This proposal, while ostensibly aimed at preventing bankruptcy and avoiding a domino effect within the financial sector, effectively shields companies that have engaged in high-risk financial practices through excessive leverage and complex share transactions. It is fundamentally unjust to adjust regulatory frameworks, such as margin requirements, to benefit entities that have overextended themselves via massive leverage or engaged in substantial share lending/borrowing and short selling practices. These entities have exploited regulatory loopholes to defer share delivery, essentially trading on IOUs, which undermines the integrity of the market and disadvantages retail investors. The practice of failing to deliver shares, along with the manipulation of short positions through dark pools and the offshoring of shorts to obfuscate the true extent of market exposure, represents a systematic evasion of regulatory oversight and market transparency. The narrative of "too big to fail" has repeatedly facilitated the rescue of Wall Street entities at the expense of market integrity and retail investors. This approach not only distorts market dynamics but also perpetuates a cycle of risk-taking and bailout that erodes public trust in financial institutions and regulatory bodies. Lowering margin requirements in times of volatility would exacerbate this issue, providing a safety net for those who have made poor financial decisions at the expense of the broader market and its participants. I urge you to consider the long-term implications of such a policy adjustment. The regulatory framework should prioritize market stability, transparency, and fairness, ensuring that all market participants are held to the same standards. Companies that engage in risky financial practices should bear the consequences of their actions. This accountability is essential for maintaining a healthy, stable, and fair market environment. I strongly advocate for the SEC to reconsider this proposal and to maintain or even strengthen margin requirements to discourage excessive risk-taking and to protect the interests of retail investors and the integrity of the financial markets. Let us not sacrifice the principles of accountability and market fairness for the short-term interests of a few. Thank you for your attention to this critical matter. I look forward to your response and to the SEC's actions that reflect a commitment to upholding the highest standards of market regulation and investor protection. Sincerely, Olav