We are at a cross roads as an economy, thus as a country. Hedge funds and other similar large corporate entities have an unfair advantage in the market, and has acted to the detriment of the health of our economy as a whole. Loose rules related to the reporting of short interest and FTDs(fail to deliver) has created an environment that allows hedge funds and the like to take advantage of retail investors. Though illegal, naked short positions are rampant throughout the market. Under our current system, it is easy to falsify reports on short interest. If covered, the naked short will never be uncovered or investigated. This is incredibly dangerous, as the synthetic shares created by the naked short pose incredible risk to the market. We can’t continue to allow this to happen if we want to have a fair market. Retail has a significant disadvantage when it comes to the stock market. Through mechanisms such as payment for order flow, dark pools and high frequency trading, hedge fu da and the like are able to essentially ensure that stocks move in accordance with the best interest of their positions. Retail foots the bill for their profits. This can not continue, as there is finite liquidity. Entropy can’t be maintained in an isolated system. If we don’t act, the entire economy is at risk. We have to have transparency on all levels in regards to the market. Otherwise, retail investors will lose faith in the market entirely. At which point, the entire market will be bearish. That may be an understatement. The entire market may crash. Every single sector. There is no telling how much damage that would do to our nation. The market is so deeply ingrained in our economy that the impact would be truly unimaginable. All of the proposals for increased transparency listed in Regulatory Notice 21-19 would be a major step in avoiding such issues. One stock that indicates major risk is GME(GameStop). If you follow the available shares to loan along side the daily action of the stock, it is clear the short interest has to be radically higher. The short interest has to be larger than the float for that specific stock. This means GME has to be victim to naked short positions. Newly borrowed shares are used to fill short positions that are reaching their date to be closed. The positions are being covered, but not closed. This, along side lose self reporting of short interest, indicates a massive short positions on that particular stock. The price action has to be the result of manipulation. Of course, GME is not the only victim of predatory short selling, but it is a great example. As it stands, hedge funds and the like cannot be allowed to continue to have advantage over the clients that need them to be able to invest. This a major issue to the health and fairness of the stock market. Please pass all proposed changes the promote transparency in the stock market.
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Jay Comment On Regulatory Notice 21-19
We are at a cross roads as an economy, thus as a country. Hedge funds and other similar large corporate entities have an unfair advantage in the market, and has acted to the detriment of the health of our economy as a whole. Loose rules related to the reporting of short interest and FTDs(fail to deliver) has created an environment that allows hedge funds and the like to take advantage of retail investors. Though illegal, naked short positions are rampant throughout the market. Under our current system, it is easy to falsify reports on short interest. If covered, the naked short will never be uncovered or investigated. This is incredibly dangerous, as the synthetic shares created by the naked short pose incredible risk to the market. We can’t continue to allow this to happen if we want to have a fair market. Retail has a significant disadvantage when it comes to the stock market. Through mechanisms such as payment for order flow, dark pools and high frequency trading, hedge fu da and the like are able to essentially ensure that stocks move in accordance with the best interest of their positions. Retail foots the bill for their profits. This can not continue, as there is finite liquidity. Entropy can’t be maintained in an isolated system. If we don’t act, the entire economy is at risk. We have to have transparency on all levels in regards to the market. Otherwise, retail investors will lose faith in the market entirely. At which point, the entire market will be bearish. That may be an understatement. The entire market may crash. Every single sector. There is no telling how much damage that would do to our nation. The market is so deeply ingrained in our economy that the impact would be truly unimaginable. All of the proposals for increased transparency listed in Regulatory Notice 21-19 would be a major step in avoiding such issues. One stock that indicates major risk is GME(GameStop). If you follow the available shares to loan along side the daily action of the stock, it is clear the short interest has to be radically higher. The short interest has to be larger than the float for that specific stock. This means GME has to be victim to naked short positions. Newly borrowed shares are used to fill short positions that are reaching their date to be closed. The positions are being covered, but not closed. This, along side lose self reporting of short interest, indicates a massive short positions on that particular stock. The price action has to be the result of manipulation. Of course, GME is not the only victim of predatory short selling, but it is a great example. As it stands, hedge funds and the like cannot be allowed to continue to have advantage over the clients that need them to be able to invest. This a major issue to the health and fairness of the stock market. Please pass all proposed changes the promote transparency in the stock market.