FINRA 21-19 is a long overdue change. It is critical for the survivability of the US Markets that transparency and trust remain with to sustain it. Recent events have called that critical trust relationship into question, and as an American who serves this country, I urge FINRA do its utmost to ensure that the integrity of the United States markets remain intact. Unfortunately, businesses have proven that self-reporting and self-regulation do not work, and thus government regulation needs to step in to ensure markets are fair and equal for all participants to ensure continual survival. Our markets have been strained to the edge of disaster, large-in-part due to systemic risk developed under the regulatory authority of FINRA's outdated short interest reporting policy.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. It is critical for the restoration of both the stability of the US markets and the confidence of the investors within it that any and all regulation changes regarding short interest reporting be effective in every known circumstance where effective short positions--synthetic or not--can go unaccounted for for any length of time. The cost of operations necessary for applicable market members to accommodate these standards cannot be reasonably compared to the cost of a compromised market with systemic risk or the loss of investor confidence and participation in the US economy. Additionally, penalties for violating these rules and regulations historically have lacked sufficient strength to provide real deterrence to companies committing fraud and criminal acts, and I plead that FINRA seek real consequences for those that violate FINRA 21-19.
JH Hosford Comment On Regulatory Notice 21-19
FINRA 21-19 is a long overdue change. It is critical for the survivability of the US Markets that transparency and trust remain with to sustain it. Recent events have called that critical trust relationship into question, and as an American who serves this country, I urge FINRA do its utmost to ensure that the integrity of the United States markets remain intact. Unfortunately, businesses have proven that self-reporting and self-regulation do not work, and thus government regulation needs to step in to ensure markets are fair and equal for all participants to ensure continual survival. Our markets have been strained to the edge of disaster, large-in-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. It is critical for the restoration of both the stability of the US markets and the confidence of the investors within it that any and all regulation changes regarding short interest reporting be effective in every known circumstance where effective short positions--synthetic or not--can go unaccounted for for any length of time. The cost of operations necessary for applicable market members to accommodate these standards cannot be reasonably compared to the cost of a compromised market with systemic risk or the loss of investor confidence and participation in the US economy. Additionally, penalties for violating these rules and regulations historically have lacked sufficient strength to provide real deterrence to companies committing fraud and criminal acts, and I plead that FINRA seek real consequences for those that violate FINRA 21-19.