I am losing faith in the Regulations governing the Securities Market! As a retail investor I believe that the provably widespread practice of naked shorting dilutes the share pool of companies that I believe in which artificially lowers stock prices. It is a method that predatory short hedge funds use to drive stock prices down, rather than allowing the market to engage in true price discovery. This causes companies which might otherwise be beneficial to society to shut down, illegally lowers my investment returns, and undermines my faith in the market. FINRA and all regulatory agencies need to change the rules to make this practice no longer possible and institute massive penalties for those caught engaging in it. As enterprises were told to move away from traditional pensions and to place the future of hard work in the hands of criminals. My 401K is invested in the market & my future feels more precarious than ever. - Large hedge funds and market makers cannot continue to be ran/controlled by the same company. They need to be broken up. Remove the ability to infinitely reset the Failure To Deliver timer. Force collateral requirements to be met with money or physical shares. No using options contracts as collateral, if they want to use options then they must exercise the contracts to obtain the shares to fulfill their requirements. This also goes for shares that are held on margin, since you technically do not own the share when it is held on margin. Accurate short reporting: Synthetic (naked short) shares are possibly 10X the float of many stocks (GME & AMC), this is not reflected anywhere. The only data we do have show 18% short interest, but it should be 500%. This needs to be updated daily. There certainly is a place for short selling as long as it is clearly defined who the short and long sellers in a trade are and the underlying security actually exists. However, this practice has become predatory in nature, with retail investors and companies being the victims. self-reporting is a joke. We have the systems and technology available to ensure trades are marked correctly, that they are delivered adequately, not rehypothecated, and accurately reported. There are instances that 97% of all short trades being marked as long in order to bypass the alternative short tick rule (SSR) and the fine for 500 million $ in trades being a meager $10-$150k. This makes FINRA fines to be the cost of doing business rather than de-incentivizing this type of malicious behavior where retail traders and other lose. Hiding short positions with options strategies and ETFs to avoid reporting short interest to FINRA to make it appear the shorts have covered Dark Pool and OTC trades: 7/12 the dark pool trading was 67% of all volume, with the average block size of 193! That is not what the DP & OTCs were designed for. It should only have infrequent, large block (1M share) trades. Every trade must be accounted for, without it, the rest of the market is completely worthless. Get rid of Dark Pool. Have a holding period for shares that are purchased in the Dark Pool, before they can be sold again, especially when it’s usually in the NYSE. Maybe we can limit the % of trading on DP to like 10% only. High frequency low volume trades done in dark pools (among others) are being used to influence stock pricing. This market manipulation also needs to be clamped down on, enforced, and punished with heavy fines. Enforce the laws and Fines: The “Fine should fit the crime”. We need more regulations and stiffer penalties on naked short selling. The fines that are handed out for FTDs and naked short selling are a drop in the bucket to these big firms. There should be a fine that is more than the benefit they got by not closing out the FTDs and naked shorts in the given time frame. Maybe have the fine be the current market price it would take to close their short positions. So if they don’t close them, it will cost them 2X to do so after the dead line. Perhaps fines should GROW as the number of similar infractions rise. The fraud that has been perpetrated should land several CEO's in prison. They get paid well enough to take that risk. If you take the job as CEO of a bank, get paid hundreds of millions per year in compensation, you do not get the opportunity to plead ignorance when your lending units are allowing naked shorting. Rules that are not enforced are worse than now rules at all. Need to increase the frequency fines are delivered, and the speed at coming to a final judgement on infractions.
CD Comment On Regulatory Notice 21-19
I am losing faith in the Regulations governing the Securities Market! As a retail investor I believe that the provably widespread practice of naked shorting dilutes the share pool of companies that I believe in which artificially lowers stock prices. It is a method that predatory short hedge funds use to drive stock prices down, rather than allowing the market to engage in true price discovery. This causes companies which might otherwise be beneficial to society to shut down, illegally lowers my investment returns, and undermines my faith in the market. FINRA and all regulatory agencies need to change the rules to make this practice no longer possible and institute massive penalties for those caught engaging in it. As enterprises were told to move away from traditional pensions and to place the future of hard work in the hands of criminals. My 401K is invested in the market & my future feels more precarious than ever. - Large hedge funds and market makers cannot continue to be ran/controlled by the same company. They need to be broken up. Remove the ability to infinitely reset the Failure To Deliver timer. Force collateral requirements to be met with money or physical shares. No using options contracts as collateral, if they want to use options then they must exercise the contracts to obtain the shares to fulfill their requirements. This also goes for shares that are held on margin, since you technically do not own the share when it is held on margin. Accurate short reporting: Synthetic (naked short) shares are possibly 10X the float of many stocks (GME & AMC), this is not reflected anywhere. The only data we do have show 18% short interest, but it should be 500%. This needs to be updated daily. There certainly is a place for short selling as long as it is clearly defined who the short and long sellers in a trade are and the underlying security actually exists. However, this practice has become predatory in nature, with retail investors and companies being the victims. self-reporting is a joke. We have the systems and technology available to ensure trades are marked correctly, that they are delivered adequately, not rehypothecated, and accurately reported. There are instances that 97% of all short trades being marked as long in order to bypass the alternative short tick rule (SSR) and the fine for 500 million $ in trades being a meager $10-$150k. This makes FINRA fines to be the cost of doing business rather than de-incentivizing this type of malicious behavior where retail traders and other lose. Hiding short positions with options strategies and ETFs to avoid reporting short interest to FINRA to make it appear the shorts have covered Dark Pool and OTC trades: 7/12 the dark pool trading was 67% of all volume, with the average block size of 193! That is not what the DP & OTCs were designed for. It should only have infrequent, large block (1M share) trades. Every trade must be accounted for, without it, the rest of the market is completely worthless. Get rid of Dark Pool. Have a holding period for shares that are purchased in the Dark Pool, before they can be sold again, especially when it’s usually in the NYSE. Maybe we can limit the % of trading on DP to like 10% only. High frequency low volume trades done in dark pools (among others) are being used to influence stock pricing. This market manipulation also needs to be clamped down on, enforced, and punished with heavy fines. Enforce the laws and Fines: The “Fine should fit the crime”. We need more regulations and stiffer penalties on naked short selling. The fines that are handed out for FTDs and naked short selling are a drop in the bucket to these big firms. There should be a fine that is more than the benefit they got by not closing out the FTDs and naked shorts in the given time frame. Maybe have the fine be the current market price it would take to close their short positions. So if they don’t close them, it will cost them 2X to do so after the dead line. Perhaps fines should GROW as the number of similar infractions rise. The fraud that has been perpetrated should land several CEO's in prison. They get paid well enough to take that risk. If you take the job as CEO of a bank, get paid hundreds of millions per year in compensation, you do not get the opportunity to plead ignorance when your lending units are allowing naked shorting. Rules that are not enforced are worse than now rules at all. Need to increase the frequency fines are delivered, and the speed at coming to a final judgement on infractions.