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Mr. Jonathan G Katz
December 23, 2003 File No. S7-23-03 Dear Sir: I am contacting you to voice my concerns over the proposed Regulation SHO under the Securities Act of 1934. It is with strong conviction that I tell you that the proposed rule will have an adverse effect on the market, especially in the area of the small investor. It was my belief that the SEC valued and protected the rights of the small/individual investor. Regulation SHO will most certainly give market making firms an unfair advantage. As a registered representative for the past five years, I understand the market maker justification of full time shorting for smooth and orderly executions for their customers. However, as more and more volume is being diverted to the various ECNs, market makers do not act in the same function that made that defense once acceptable. All Regulation SHO will do is alienate small/individual investors from the liquidity that they are owed and hand it to market makers. As to the actual Bid Test rule, I find myself wondering what benefits it would bring about. As the shorting policy currently stands, all that is needed to short is an "up arrow." This makes perfect sense and should not be altered. If there is liquidity sufficient enough for a short to take place, there should be no one cent above the best bid to be a concern. As long as buyers and sellers are matched and are within the parameters of the rules, the price in which they agree to should not be constrained to pre-set rules. Thank you for your time and your consideration. Sincerely, Alexander Benetti |