As a retail investor, I am concerned about the fairness of the current financial system. Having read many theoretical posts on r/Superstonk about the economy and doing my own research, I believe that more regulation on shorting is necessary in order to avoid the unfair devaluation of companies and protect smaller companies from its effects. In particular, more needs to be done about Fail-to-Delivers and synthetic shares to reduce the power that Market Makers and Hedge Funds have in determining the value of a stock on the market. Considering the current situation with Gamestop, it is unfair to retail investors that hedge funds are able to drive down the value of a stock through shorting and avoid covering these shorts when the tide turns against them by abusing loopholes in the short interest reporting system by using methods such as options. I suggest that FINRA expand the content of short interest data and enforce shorter reporting intervals so that these behaviors can be better monitored and so that investors can become more informed about changes within the market.
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Anonymous-ED Comment On Regulatory Notice 21-19
As a retail investor, I am concerned about the fairness of the current financial system. Having read many theoretical posts on r/Superstonk about the economy and doing my own research, I believe that more regulation on shorting is necessary in order to avoid the unfair devaluation of companies and protect smaller companies from its effects. In particular, more needs to be done about Fail-to-Delivers and synthetic shares to reduce the power that Market Makers and Hedge Funds have in determining the value of a stock on the market. Considering the current situation with Gamestop, it is unfair to retail investors that hedge funds are able to drive down the value of a stock through shorting and avoid covering these shorts when the tide turns against them by abusing loopholes in the short interest reporting system by using methods such as options. I suggest that FINRA expand the content of short interest data and enforce shorter reporting intervals so that these behaviors can be better monitored and so that investors can become more informed about changes within the market.