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December 19, 2003 Mr. Jonathan G. Katz
RE: File No. S7-23-03 Dear Mr. Katz: I am writing to you to express my concerns over the proposed Regulation SHO. I am a professional trader employed by Trillium Trading, LLC. I feel that a new uniform bid test allowing short sales to be effected at a price one cent above the consolidated best bid would be wrong for several reasons. Regulation SHO would have an immediate negative impact on market liquidity. This lack of added liquidity could actually be more harmful to exaggerated down moves in a stock. The proposed regulation would not only be detrimental to short sellers, it would hurt buyers as well. Buyers will be forced in many situations to pay the spread in order to get long the stock because short sellers will not be able to hit their bids. Therefore, the buyer does not get the true best price. The exemption of market makers from the bid test is truly unjust. The day-to-day regime of a market maker consists of a great deal of "day trading." To give the market makers this advantage of not having a bid test rule is ridiculous. It puts everyone like myself, who actively trades for his or her livelihood at an immediate disadvantage. In conclusion, the proposed regulation SHO would definitely have an adverse impact on trading, and on the livelihood of many professional traders. I strongly urge you to reconsider the proposed Regulation SHO. Sincerely, Eric T. D'Orio |