You are requested to comment on these proposals. Let's face it, the Hedge Funds are going to be using their voices to prevent these changes from occurring so we need to use our voice too. There are a lot more apes than Hedgies. I've cut and pasted just some of the proposals (man, if you think this is a long and dry read, wait until you read the webpage): - Account-level Position Information: Alternatively, FINRA is considering requiring firms to report (for regulatory purposes only; not to be disseminated publicly) short interest position information with more granularity by reporting at the account level for all equity securities Synthetic Short Positions: In addition, FINRA is considering requiring firms to reflect synthetic short positions in short interest reports. Total Shares Outstanding (TSO) and Public Float: FINRA also is considering including in FINRA-disseminated short interest data, where available, the TSO and public float for securities. (I might need someone to explain this in more detail as I may well be wrong in thinking this would include all naked shorts.) Threshold Security Field:12 FINRA is considering including in FINRA-disseminated short interest data a new field that would indicate if the security is a threshold security as of the short interest position reporting settlement date. Frequency and Timing of Short Interest Position Reporting and Data Dissemination Increasing the frequency and timing of reporting and disseminating short interest data would provide FINRA, other regulators, investors and other market participants with a more current view of short interest information, better inform investors’ and other market participants’ investment decisions, and provide more timely information to FINRA for regulatory use. Information on Allocations of Fail-to-Deliver Positions FINRA is considering enhancing its short sale reporting program by adopting a new rule to require members to submit to FINRA (for regulatory purposes only; not for public dissemination) a report of daily allocations of fail-to-deliver positions to correspondent firms pursuant to Rule 204(d) of Regulation SHO. Synthetic Short Position (I know this is mentioned above but this explicitly refers to the practice HFs use to "kick the can down the road" for FTDs.) The sale of a call option and purchase of a put option with the same expiration date and strike price provides equivalent exposure to the price of a stock as a short sale. Despite this equivalence, this synthetic position does not currently create a short position that would be reportable under the current version of Rule 4560. The extent of use of this and other types of synthetic short positions is unknown. A more expansive reporting requirement that captures synthetic short positions would allow FINRA to be better able to understand market participants’ short sale-related activity. As synthetic short positions provide equivalent exposure, information on them may also provide investors and other market participants with similarly useful information on negative sentiment. Loan Obligations Resulting from Arranged Financing When a customer closes-out a short position by delivering shares borrowed from a member’s affiliate, the customer acquires an obligation to deliver shares to the affiliate in the future. The exposure from this loan obligation is substantially equivalent to a short position but the loan obligation is not a reportable short position under the current version of Rule 4560. If customers can close out short positions by borrowing shares from unaffiliated lenders, those loan obligations would have the same economic equivalence to reportable short positions. We request comment below on whether firms have such programs. I think it's very important for us to have our say. In my previous post people said it will have no effect, perhaps not but if we don't comment it definitely will have no effect. Comments must be submitted before the 4th August 2021.
John Church Comment On Regulatory Notice 21-19
You are requested to comment on these proposals. Let's face it, the Hedge Funds are going to be using their voices to prevent these changes from occurring so we need to use our voice too. There are a lot more apes than Hedgies. I've cut and pasted just some of the proposals (man, if you think this is a long and dry read, wait until you read the webpage): - Account-level Position Information: Alternatively, FINRA is considering requiring firms to report (for regulatory purposes only; not to be disseminated publicly) short interest position information with more granularity by reporting at the account level for all equity securities Synthetic Short Positions: In addition, FINRA is considering requiring firms to reflect synthetic short positions in short interest reports. Total Shares Outstanding (TSO) and Public Float: FINRA also is considering including in FINRA-disseminated short interest data, where available, the TSO and public float for securities. (I might need someone to explain this in more detail as I may well be wrong in thinking this would include all naked shorts.) Threshold Security Field:12 FINRA is considering including in FINRA-disseminated short interest data a new field that would indicate if the security is a threshold security as of the short interest position reporting settlement date. Frequency and Timing of Short Interest Position Reporting and Data Dissemination Increasing the frequency and timing of reporting and disseminating short interest data would provide FINRA, other regulators, investors and other market participants with a more current view of short interest information, better inform investors’ and other market participants’ investment decisions, and provide more timely information to FINRA for regulatory use. Information on Allocations of Fail-to-Deliver Positions FINRA is considering enhancing its short sale reporting program by adopting a new rule to require members to submit to FINRA (for regulatory purposes only; not for public dissemination) a report of daily allocations of fail-to-deliver positions to correspondent firms pursuant to Rule 204(d) of Regulation SHO. Synthetic Short Position (I know this is mentioned above but this explicitly refers to the practice HFs use to "kick the can down the road" for FTDs.) The sale of a call option and purchase of a put option with the same expiration date and strike price provides equivalent exposure to the price of a stock as a short sale. Despite this equivalence, this synthetic position does not currently create a short position that would be reportable under the current version of Rule 4560. The extent of use of this and other types of synthetic short positions is unknown. A more expansive reporting requirement that captures synthetic short positions would allow FINRA to be better able to understand market participants’ short sale-related activity. As synthetic short positions provide equivalent exposure, information on them may also provide investors and other market participants with similarly useful information on negative sentiment. Loan Obligations Resulting from Arranged Financing When a customer closes-out a short position by delivering shares borrowed from a member’s affiliate, the customer acquires an obligation to deliver shares to the affiliate in the future. The exposure from this loan obligation is substantially equivalent to a short position but the loan obligation is not a reportable short position under the current version of Rule 4560. If customers can close out short positions by borrowing shares from unaffiliated lenders, those loan obligations would have the same economic equivalence to reportable short positions. We request comment below on whether firms have such programs. I think it's very important for us to have our say. In my previous post people said it will have no effect, perhaps not but if we don't comment it definitely will have no effect. Comments must be submitted before the 4th August 2021.