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Kyle Pugh Comment On Regulatory Notice 21-19

Kyle Pugh

These rules changes seem to be helpful except for the "alternatively" found all over the place. Make all these rules in effect, no alternatives. FINRA should get all the information possible about any financial activity and make as much as possible of that information public. The originator of a short position should be on the hook for the short position. Currently, if a market maker shorts a bunch of shares to a broker there is no way to know that. The broker is then on the hook for the shares to be delivered but the market maker already said they delivered the shares. So why is the broker still on the hook? Seems that the broker already did deliver the shares. The market maker seems to be the one not delivering shares. This is currently the problem that happened to a certain brokerage who I am beginning to think is being blamed for much much more of the problem than for which they are responsible. The problem appears to be very largely with market makers, their opaqueness, and apparent infinite ability to fake everything they do with all of the responsibilities of those actions falling onto others. I am also beginning to think that market makers do not even need to exist, they seem to be actively harming the market. There's all this talk about providing liquidity but at what expense? That every single security is diluted by an exponential inflation? There will always be increasing failures to deliver if the reason market makers exist is liquidity because they have to short in order to create shares when no one is willing to sell or purchase when no one is willing to sell. If they short then they have interest in the price continuing to drop. If they buy then they have interest in the price rising. But they are the ones creating that movement to begin. That sure seems like market manipulation. If no one is willing to sell, then the price should go up, not down. Conversely, if everyone is selling, the price should go down, not up. There are becoming more and more examples of securities that are being overbought because the market makers have interest in the price dropping but it should be raising or being oversold and rising not dropping. I think that these rules actually change pretty much nothing. The problem is allowing an entity with the power to create short positions also have the power to directly receive and perform trades. They can look at all the exchange order information and have a computer algorithm find the best method to raise or lower the price of a security by paying to execute specific orders. They do not even have to actually provide anything because someone else is immediately on the hook for the delivery of the securities. So why would they not short every single order they execute until they can buy them back from investors who are trying not to lose all their money from a free fall? They will buy only when it is a necessity because if they are successful in shorting continuously then they don't have to buy back anything and just got free money by purposefully failing to deliver shorts they purposefully knew they were not going to deliver....