From: Dan Solomon [dsolomon60@hotmail.com]
Sent: Sunday, January 04, 2004 12:57 PM
To: rule-comments@sec.gov
Subject: Comments regarding Regulation SHO - File No. S7-23-03

Dan Solomon

December 24, 2003

77 5th Avenue, Apt. 16D
New York, NY 10003

Mr. Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 5th St., NW
Washington DC 20549-0609

Dear Mr. Katz,

 

I am writing in response to the proposed Regulation SHO - File No. S7-23-03, 
and to explain why, in my belief, certain aspects of the proposal would be 
detrimental to the equity markets.  

 

I am currently employed as an equity trader for Trillium Trading, L.L.C, 
which is part of the Schonfeld Group.  I have been employed by Trillium 
(and by its predecessor, Heartland Securities) since October 2002.  In my 
current position as an equity trader, I trade approximately 20 million 
shares of stock each month, mostly short term intraday trades in NASDAQ 
and NYSE stocks.  

 

Regulation SHO, specifically, the proposed requirement that short sales be 
effected at least one cent above the best bid at the time of execution, 
would dramatically impede the ability of traders and investors to receive 
fair stock executions in many circumstances.  In general, such a rule would 
greatly reduce liquidity in the marketplace and would effectively cause the 
market as a whole to become less efficient.  In addition, such a short sale 
rule would promote a distinct upward/long bias in stocks - a bias which 
would not reflect  actual trader/investor sentiment, but rather, would simply 
reflect the greater restrictions imposed on getting short as compared to 
getting long.   In concept, I don't agree that restrictions should exist 
which allow traders greater ease in getting long (or short), as opposed to 
getting short (or long).  I don't think such restrictions could deter long 
term or short term downturns in the market, nor could they prevent "irrational 
exuberance" for that matter. 

 

With respect to the proposed two year suspension to the bid test rule for 
specified liquid stocks, I am a proponent of this idea.  The suspension of 
the bid test rule is a step towards creating a more fair market. I believe 
that during your two-year pilot program you will see results that support a 
more efficient and less biased market; in fact, I urge you to include as 
many stocks in the pilot program a possible, if for no other reason than to 
provide the largest possible sample of stocks from which to arrive at a 
fair conclusion.  

 

Thank you for your considerations.  

 

Regards,

 

Dan Solomon