Comment Text:
i asked the SEC if this roundtable would address the debt/equity swaps used to fund shortselling and failure to deliver. the SEC didn't answer this question in advance.
this whole rule-making thing is not transparent to the public. investors have been suffering delays. i just found out about "transition schedules", another non-public item.
(shortsellers are not investors, they take $ out of the market, capital outflows.) worse, it appears that there are two different rules: one for investors and one for shortsellers. it is BAD for economies. you cannot run an economy on shortselling.
brokers are broke due to the many years practice of putting their shortselling into debt/equity swaps. E-Trade is broke, see their financials, and should have NO margin to fund imaginary transactions. clearinghouses should be requiring brokers to trade shares at the settlement date or else buying them in. the clearinghouses are at risk because of these practices. worse, brokers will clear for each other and not apply deadline rules. clearing is a risk and there should be required bonds and insurance to back the clearing process. brokers who clear should have to put up this bond and insurance separate from their business. further, brokers who clear for themselves should also have to carry a bond and insurance for their own transactions, if they are not sending them through LICENSED clearinghouses.
this shortselling fraud may bring a lot of entities down. we will see who will still be standing, i guess. get those IOU's out of the stock market. brokers who hold them owe their investors shares and trust. brokers who give them owe a debt to the investors. brokers and clearinghouses should be buying in those shares that are not delivered in a timely fashion.
make clearinghouses apply deadlines, actually clear transactions. we need a financial system. the world economy won't get better without the rules being enforced.
if clearinghouses worry about one major customer failing, how about four major customers failing at the same time. the IOU's are swapped among dealers and one failure may take down everyone.
i am waiting for a transcript of this roundtable to be posted now.
