My comments submissions are: 1. The purpose of this change is to improve transparency within the market to counter fraudulently or bad actors having the ability to circumvent reporting mechanisms for their own gain, and often the loss that retail investors suffer as a result when operating within the market. This premise should underpin how all comments are reviewed and revisions incorporated. 2. Reporting should be moved to T+1 daily to ensure access to market data published is available to all investors in a timely fashion, but also that allows a more immediate capability to note misreporting. 3. Reporting data should be more transparent. FTDs and other similar outputs should publicly show the specifics e.g those who are failing to deliver, notional/nominal and where the trade originated e.g. NYSE or a dark pool. Providing data for failures increases transparency and thus public accountability. 4. Misreporting (e.g. not marking short sales "short") should have a tiered consequence system. When a firm misreports on more than 3 occasions within 5 years there should be punitive fines starting at the 100,000,000 USD range and upwards. Right now fines are cheaper than resolving the issue and thus regulation is failing to do what it's meant to do. Investigations in to each misreporting event should also include a willful test and a mitigation test. If, for example, misreporting occurred due to lack of secondary controls within a firm that any reasonable firm would have in place the fines should be supplemented with DOJ review. Or if a clear willful misreporting has occurred where a valid and reasonable mitigating reason can not be established and proven, these should be automatically investigated for criminal as well as regulatory sanction under market disruption. 5. Each failure reported should also name the specific employee who traded the position, compliance officer, reporting manager (who is responsible for the submission of reports to FINRA), and head of department involved as part of FINRA registration records. 6. Wider submission requirement that advises firms that on each T+1 submission, the data within said report, and the responsible officer submitting it (when via automated reporting, the compliance officer would be the responsible officer and additionally undertake annual certification that reports are meeting the regulatory requirement under oath. Where consistent failures occur if the same parties are involved on more than 2 occasions in 5 years, FINRA licenses and "fit and proper persons" can be suspended. In summary (a) more data and transparency b) quicker data and more often (c) accountability tied to compliance officer, employees (d) grow some teeth and have submissions certified and tied to criminal as well as civil penalties both at employee level and firm level.
Charlotte Roth Comment On Regulatory Notice 21-19
My comments submissions are: 1. The purpose of this change is to improve transparency within the market to counter fraudulently or bad actors having the ability to circumvent reporting mechanisms for their own gain, and often the loss that retail investors suffer as a result when operating within the market. This premise should underpin how all comments are reviewed and revisions incorporated. 2. Reporting should be moved to T+1 daily to ensure access to market data published is available to all investors in a timely fashion, but also that allows a more immediate capability to note misreporting. 3. Reporting data should be more transparent. FTDs and other similar outputs should publicly show the specifics e.g those who are failing to deliver, notional/nominal and where the trade originated e.g. NYSE or a dark pool. Providing data for failures increases transparency and thus public accountability. 4. Misreporting (e.g. not marking short sales "short") should have a tiered consequence system. When a firm misreports on more than 3 occasions within 5 years there should be punitive fines starting at the 100,000,000 USD range and upwards. Right now fines are cheaper than resolving the issue and thus regulation is failing to do what it's meant to do. Investigations in to each misreporting event should also include a willful test and a mitigation test. If, for example, misreporting occurred due to lack of secondary controls within a firm that any reasonable firm would have in place the fines should be supplemented with DOJ review. Or if a clear willful misreporting has occurred where a valid and reasonable mitigating reason can not be established and proven, these should be automatically investigated for criminal as well as regulatory sanction under market disruption. 5. Each failure reported should also name the specific employee who traded the position, compliance officer, reporting manager (who is responsible for the submission of reports to FINRA), and head of department involved as part of FINRA registration records. 6. Wider submission requirement that advises firms that on each T+1 submission, the data within said report, and the responsible officer submitting it (when via automated reporting, the compliance officer would be the responsible officer and additionally undertake annual certification that reports are meeting the regulatory requirement under oath. Where consistent failures occur if the same parties are involved on more than 2 occasions in 5 years, FINRA licenses and "fit and proper persons" can be suspended. In summary (a) more data and transparency b) quicker data and more often (c) accountability tied to compliance officer, employees (d) grow some teeth and have submissions certified and tied to criminal as well as civil penalties both at employee level and firm level.