Comment Text:
Comments provided for the benefit of the CFTC:
The securities and other asset classes traded as perpetual swaps are supposed to be PUBLICLY traded securities. If one entity owns shares of a security but a second entity has all the benefits and costs of owning it, then in fact the second entity owns them in every way except the name on the certificate. This is a type of dark market right there.
In a public/transparent market if an entity wanted to reap the benefits of a particular security: that entity should buy it. If one entity buys a whole bunch of this security but decides they don't like it: they should sell it.
BOTH of those actions lead to changes in the security's price. But when these perpetual swaps are done outside of the market, it's like one person bought and one person sold except that it was all done behind the scenes and does NOT affect the price.
All the sales done in dark pools do NOT affect the price. All the sales in private rooms do NOT affect the price.
The numbers for off exchange trading are so big these days that many securities are not PUBLICLY traded anymore at all. They are primarily privately traded with a publicly traded contingent.
Further, access to all the off exchange mechanisms are very limited. It would be different if everyone had equal access to dark pools and private rooms. It would still be a problem to have so many transactions done in NON-public manners. But at least everyone would have equal access. In the system we have right now, huge numbers of "PUBLICLY traded companies" actually traded largely PRIVATELY. And in addition, a very small number of people have access to those non- public mechanisms.
When a company is publicly traded, it must ONLY be publicly traded. Not half publicly traded and half traded in perpetual swaps in private rooms. Not 1/3 publicly traded and 2/3 traded in dark pools.
Singapore, Korea, many other countries outlaw things that corrupt their market. The US IS NOT. We are now further behind and transparent markets than many other countries.
Including countries that have eliminated naked short selling (I don't mean outlawing it in quotation marks" - I mean getting rid of it. A completely different concept than what the US currently employs.
The MM's are creating conditions beneficial for them. But when a small number of MM's create the conditions for trading that are financially beneficial to them, it means the vast majority of investors and traders will also be stuck with those same conditions - created by, and beneficial to certain MMs.
This is the United States of America for God's sake. We should have the most advanced, transparent market on the face of the Earth. We are currently in roughly 4th place.
Time for the United States to get its act together.
Please listen.
Most sincerely,
C-a-M
