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Jonathan Comment On Regulatory Notice 21-19

County of Santa Clara - Public Safety and Justice

The Reporting of Loan Obligations as Short Interest. Theory suggests that some participants are borrowing shares from ETF's to cover their existing short interest. This only results in the same exposure continuing to exist elsewhere in the market, in effect, the short position has not been closed, but rather, is moved off the books which affects the integrity on both ends of the affiliate program. I submit that loan obligations should certainly be reflected as short interest, and that improved accounting and disclosure practices are necessary for describing the honest exposure of open short positions. The following article further describes the problem as a shell game, wherein the lack of reporting requirements today has theoretically enabled some participants to shift their short obligations in an effort to avoid disclosure.