Comment Text:
To whom it may concern
I firmly take the perspective of Chairman Christy Romero's comment posted at the following link. https://www.cftc.gov/Press Room/SpeechesTestimony /romerostatement062823
The potential new vertical integration of clearinghouses with the customer facing intermediaries will not promote market stability, investor protection, or reduced market risk. This new regulatory framework should not be implemented under any circumstances. It only serves to hand over the ability of substantially more risk and leverage to a vertically integrated (see: monopoly) clearinghouse, with a significant reduction in seeing both the level of risk and the ability of a naturally occurring disciplinary feedback mechanism to be in place.
Again, this new market structure and regulatory proposal should not be implemented in any fashion.
A quote from Romero's comment is especially prescient: "Our clearinghouse rules were not set up to protect customers, because they were written with the idea of a separate intermediary that interacted with customers and had regulatory obligations for customer protections."
Now that the intermediary is being eliminated, the regulatory rules in place for clearinghouses reduces protection for customers and allows abuse of investors through lack of investor protection. Without regulatory oversight and consumer protection, investors cannot have confidence in their market, which is essential for functioning markets. Aside from the lack of confidence, believe we all understand that clearinghouses are not looking out for the customers and investors first.
Trade execution can no longer be guaranteed to favor or look out for the investor. There is now less competitior less regulatory oversight here, and no need for the clearinghouses to abide by fair trade execution practice.
This new proposed vertically integrated market structure now brings additional risks to the marketplace, less regulatory oversight, less visibility and reporting from these consolidated clearinghouses. As history has clearly shown - any leverage and risk that can be taken to make more money - will absolutely be taken.
This vertical integration poses additional risks with absolutely no benefit.
This new regulatory proposal should not be implemented in any fashion, and only serves to hand over more power to clearinghouses, eliminate their competition, and allow them to make more money through poor trade fulfilment and questionable margin requirements or structure, at the expense of additional risk, contagion, and cascading losses that investors and customers will ultimately take the losses for.
Thank you
