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Joel Williams Comment On Regulatory Notice 21-19

Joel Williams
Retail Investor

Changes that I see as needed in no particular order of import: 1. All borrowed shares should be tracked in the system and only be able to be lent out 1 time maximum. No more than 200% of the entire float at one time. Shareholders should be be paid the lending fee directly and then the broker can take out what fee they deem necessary. This transaction should be transparent to the investor and should be less than 5% or whatever interest rates are for big banks savings accounts. They are the shareholder's property and should be treated as such. 2. T+2 needs to be abolished. No reason we can't have same day settlements for both shares and ACH transfers. 3. Institutions should be required to publicly record all of their positions. Short, Long, calls, puts, everything. There are benefits they have that others don't, the drawback should be full transparency. 4. The pattern day trading limits are unnecessary. An arbitrary 25k liquidity requirement? If they are on margin you have margin calls to control risk, if they are on a cash account what does it matter how often they trade per day. Its silly to control how many times a person can trade a stock per day no matter how much money they are playing with. If it's deemed risky behavior there should be safeguards in place like margin rules already. 5. Dark pools have strayed from what I deem the intended purpose is. It's meant to hide the orders of Large buyer's or sellers when they have to move large amounts of stock. It's being abused to the point where there is 60% or more of the transactions in any particular stock on any given day are being traded exclusively in the Dark pools. Not large orders either, I think the average I read was something like an average size of 110 shares. Clearly there is some advantage to trading in a dark pool if they are being utilized this heavily, which removes those shares from the public sector and gouges price discovery. 6. Payment for order flow is a toxic practice and is bad for the health of the markets. If the orders being routed are so desirable they should be up for grabs for everyone in the market to fight over, not the people who pay money under the table. Again this messes with spread of the bid and ask and interferes with market competition to find the best price. 7. Government officials such as Senators, governors, the President, Vice president, Congress, etc., should not be allowed to participate in the stock market. They are basically working off of insider trading and the practice should be illegal. Holding that position should be a public service not a privilege. 8. The time scale certain practices needs to be updated and modernized. Since we have entered the digital age the time to report certain actions needs to be lessened from 2-6 weeks down to a week at most. I'm talking about broker reported short interest reports which are reported bi-Monthly should be ideally less than a day and maximum less than a trading week, Failure to deliver data which ranges from T+21 to T+35, Institutions only report positions once a quarter. The time scale needs to shrink. 9. Naked shorting shouldn't be possible if you require every share to be tagged officially before shorting occurs. it is inexcusable to sell something you do not have. Borrowing shares has already been mentioned. 10. Fines for not abiding by the rules should be punished in a fashion that doesn't result in the offender still making money. If the offender makes a profit of 1 million and gets fined 50,000; that isn't a punishment, it is a commission fee. I propose 100% of profit is fined at the minimum, with a heavy dose of community service or jail time included. I'm sure Finra could use someone to fetch coffee during their hardworking hours.