Skip to main content

For updates and guidance related to COVID-19 / Coronavirus, click here.

Ashley G. Comment On Regulatory Notice 21-19

Ashley G.

I request the following to be taken into consideration for addition to the proposed rule change: - Short positions held by market makers should require enhanced reporting. In addition, anytime an options contract is opened by a MM well below market value for the stock, the time of trade and involved party should be reported. - Incorporate ETF short interest in reporting requirements. - Require firms to maintain securities lending records for 10 years. - Fines for naked short selling should equal the profit of the cumulative short position with a portion payable to the victimized Company. - Implement daily fines for firms that hold short positions with open FTDs. It should be proportional to the FTD position and upon T+X those funds should then be used to close out the position. The current regulation for automatic close out only applies to threshold list securities, but by using synthetic options the threshold may never be reached to trigger regulatory oversight. - real time updates of short interest. We are more than capable of implementing this with current technology. Reporting to the public can be at your discretion. Comments on proposed changes: - In addition to days to cover, add average length of time the position is held open to reporting requirements and whether the position was transferred to another firm. - Account-level position reporting is preferred. This should be sufficient to tell whether the position originated from a Proprietary or Customer account. - In order to require firms to report synthetic positions, you will need a way to separate them from long positions. As it stands calls and puts are considered long positions so I doubt any firm would willingly relabel them. This isn’t to say it’s a bad idea, but will need more scrutiny. - TSO should be calculated and reported independent of the clearing houses (DTCC and NSCC) to be most useful. To put it plainly, don’t normalize the results to hide evidence of naked shorting. All other proposed changes are acceptable if enforced. Thank you for your time and consideration.