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Jonathan G. Katz, Secretary
Re: Regulation SHO Dear Mr. Katz, I am writing in reference to regulation SHO. I have been a professional trader for last six years. During this time I have seen many rule changes go into effect, each time resulting in greater advantages for market makers and decreased liquidity for the small investor. Regulation SHO is another example of legislation that will help the big firms and hurt the small firms and investors. With the implementation of decimals, the need for a short sale rule has been abolished. Stocks that used to trade with 1/8 point spreads now have a $.01 spread. It doesn't make any sense for a trader to be able to get short a stock at $50.01, but not at $50.00. The effectiveness of the up tick rule was completely lost when the Nasdaq went to decimal trading. In addition, if two parties which to buy and sell stock at the same price, why would the SEC want to prohibit that from happening whether or not it is a long sale or a short sale? ECN's are voluntary trading systems. If orders match up, they should be executed against each other regardless of bid tick. In an effort to help the investor by protecting them against short sellers, Regulation SHO will only force investors to pay more for a stock if the seller is a short seller and can not execute their limit order on the bid. Sincerely, David Lazarus
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