Shawn McPherson Comment On Regulatory Notice 21-19
Please level the playing field for retail investors and require short positions to be reported daily.
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Please level the playing field for retail investors and require short positions to be reported daily.
Finra regulations must be updated to be more stringent when it comes to the reporting of short positions. This included positions created synthetically. It would also be important to address the reporting of how the borrowing process occurs and through what entities, to prevent manipulation of stocks via over shorting said stocks.
FINRA 21-19 is a long overdue change. It is clear that the integrity of the United States market has been strained to the edge of disaster, in large part due to systemic risk developed under the regulatory authority of FINRA's outdated short interest reporting policy. While many of the policies mentioned in Regulatory Notice 21-19 address the general breadth of exploitable and ineffective reporting, they also leave significant specific gaps that could compromise the entirety of 21-19's purpose.
Naked short selling in US markets is grotesque and I have no confidence in stocks because of it. Seemingly concrete evidence of this illegal market behavior is apparent in cases such as Overstock Inc vs Goldman Sachs & Co, but no regulators appear to be serious about the problem. Market Makers insist that the mechanisms that allow this activity are necessary because they “provide liquidity” but the finite liquidity of stocks is a key feature of the stock market that is being undermined to consumer detriment.
While short sales can be an important market mechanic to send signals to protect investors from corrupt or inept corporate leadership, hidden short sales and hidden synthetic short sales work against a free and fair marketplace. If institutional and "big money" investors detect reasons to believe that the future success of a company is unlikely, hiding their short positions at best circumvents the reasoning for short sales in a free and fair market, and at worst encourages bad actors to commit price manipulation at the expense of individual retail investors.
The markets are rigged to the point where a retail investor can no longer rely on them. Between the abusive naked short selling and failures to deliver, it is nearly impossible for retail to get ahead in life. It is illegal for casinos to cheat, so why should market makers be allowed? Please end these practices.
Short positions need to be reported daily by everyone. No exceptions.
FINRA 21-19 is a long overdue change. It is clear that the integrity of the United States market has been strained to the edge of disaster, in large part due to systemic risk developed under the regulatory authority of FINRA's outdated short interest reporting policy. While many of the policies mentioned in Regulatory Notice 21-19 address the general breadth of exploitable and ineffective reporting, they also leave significant specific gaps that could compromise the entirety of 21-19's purpose.
The naked shorting and dark pool abuse that is going on has to stop if you want to call yourself any kind of regulatory agency. It is unthinkable that you allow retail investors to be stolen from by market makers, when it is your job to protect the sanctity of the system itself. Loss of confidence of an ENTIRE GENERATION of investors will likely cripple the US economic system and it will be due to your inaction in the face of blatant manipulation. The de facto duopoly of Citadel and Virtu is also grossly unamerican and would not be allowed to continue in any other industry.
To FINRA, Timely and accurate reporting of all positions is paramount to the success of a trader. We use this information daily to assess the markets and to formulate strategies. All proposed changes need to be forward thinking, so we may operate in a 21’st century marketplace. We need more data to accurately predict market movements. You need to provide us with as much accurate and timely data as possible. We will process it as needed.