Leonidas Georgiou Comment On Regulatory Notice 21-19
Leonidas Georgiou
N/A
-Enhanced Failure to Delivery, Failure to Settle, Market Buy Ins, Market Lock Ins and FINRA to Publicly report these in a timely manner in .csv format on their website. The only data currently available is "Failures to Deliver" which is only 1 of several metrics. Retail and others would greatly benefit from the transparency added by simply providing this additional information about Failures to Deliver. -Implement regulatory requirements for all ADF and ATS facilities to report all trading data back to FINRA via API live 24/7 regardless of market openness status for the purpose of using the full trading data set to give an accurate and real indication of the status of internalized short volumes, hypothecated trades, self-lending for the purposes of creating synthetic long/short positions via the use of swaps or option strategies via using shares from hypothecated internalized trades. -The following rule "Change in short interest position since the prior reporting period (number of shares)" still allows for intra-period short position changes. This is a useless metric as it can be abused easily. You could perform heavy intra-period shorting activities but as long you are net short 0 by the end of the period when the short change snapshot is to be taken, this metric will indicate 0 change. The fix to this is to make the reporting period as short as possible, preferably Live as this will make it possible to track and net all transactions properly and you could then provide a metric of true short volume rather than what you propose. -Require short sale reporting on lent out shares. An organization could simply lend their shares to an HFT for the day for regular shorting activities and not report on these shorting activities thus gaming the system. By including a requirement for reporting on shorting for lent out shares, you'll be able to track these too. Additionally, you could segregate these into 2 section. 1 for each customer account type of shares that are being lent out (e.g margin lent shares, cash account lent shares etc) for slightly more granular tracking and obvious tracking of lending unlettable shares. -The full data set to be output in .csv file format in an easily accessible by the public place by FINRA. To be made public in a TIMELY manner. -Remove the market maker exemption from T+6 that allows them to not deliver a share up to T+35(The Madoff exemption) as it interferes with short sale reporting. Where all other entities are allowed to use T+2-6, some entities can use T+35 and this makes it hard to ask for shorter short reporting cycles as this T+35 exemption is used as an excuse when in fact the T+35 exemption is an archaic and useless exemption that only serves market makers like Citadel (The Market Maker) & Citadel (The Hedge Fund) to be naked in the market longer than other entities for the sake of so called "liqudity" when in fact all this just gives Market Makers more reason to be less transparent about short reporting. -
Leonidas Georgiou Comment On Regulatory Notice 21-19
-Enhanced Failure to Delivery, Failure to Settle, Market Buy Ins, Market Lock Ins and FINRA to Publicly report these in a timely manner in .csv format on their website. The only data currently available is "Failures to Deliver" which is only 1 of several metrics. Retail and others would greatly benefit from the transparency added by simply providing this additional information about Failures to Deliver. -Implement regulatory requirements for all ADF and ATS facilities to report all trading data back to FINRA via API live 24/7 regardless of market openness status for the purpose of using the full trading data set to give an accurate and real indication of the status of internalized short volumes, hypothecated trades, self-lending for the purposes of creating synthetic long/short positions via the use of swaps or option strategies via using shares from hypothecated internalized trades. -The following rule "Change in short interest position since the prior reporting period (number of shares)" still allows for intra-period short position changes. This is a useless metric as it can be abused easily. You could perform heavy intra-period shorting activities but as long you are net short 0 by the end of the period when the short change snapshot is to be taken, this metric will indicate 0 change. The fix to this is to make the reporting period as short as possible, preferably Live as this will make it possible to track and net all transactions properly and you could then provide a metric of true short volume rather than what you propose. -Require short sale reporting on lent out shares. An organization could simply lend their shares to an HFT for the day for regular shorting activities and not report on these shorting activities thus gaming the system. By including a requirement for reporting on shorting for lent out shares, you'll be able to track these too. Additionally, you could segregate these into 2 section. 1 for each customer account type of shares that are being lent out (e.g margin lent shares, cash account lent shares etc) for slightly more granular tracking and obvious tracking of lending unlettable shares. -The full data set to be output in .csv file format in an easily accessible by the public place by FINRA. To be made public in a TIMELY manner. -Remove the market maker exemption from T+6 that allows them to not deliver a share up to T+35(The Madoff exemption) as it interferes with short sale reporting. Where all other entities are allowed to use T+2-6, some entities can use T+35 and this makes it hard to ask for shorter short reporting cycles as this T+35 exemption is used as an excuse when in fact the T+35 exemption is an archaic and useless exemption that only serves market makers like Citadel (The Market Maker) & Citadel (The Hedge Fund) to be naked in the market longer than other entities for the sake of so called "liqudity" when in fact all this just gives Market Makers more reason to be less transparent about short reporting. -