Subject: SR-NASD-98-21
Date:    4/13/98 5:30 PM
     
     
My name is Chris Hawkins and I am a professional trader in Austin, Texas. 
The following is my comment concerning the Minimum Quote Rule, referenced 
above.
     
Let me begin by stating that I am absolutely opposed to the implementation 
of this rule, and firmly believe that its affect on the marketplace would 
be terrible.
     
Market makers have enormous power in the market place, and they are very 
adept at using that power to manipulate the market.  I can't tell you how 
many times a day, everyday, I see the following scenario: market maker MM 
is sitting on the offer, showing a thousand shares offered at 50 1/4.  The 
market begins to move up, and instead of honoring his quote, MM fills me 
with only 100 shares.  He then sits there for 15 seconds as the market 
begins to rip up all around him.  All of his fellow market makers are 
upping their prices and reducing their share lots to 100 shares.  MM may 
then leave the market, or fill someone else at 100 shares in a continuing 
attempt to artificially hold the market in place, while he either 
accumulates shares elsewhere or decides what to to.  In the mean time, the 
investing public was for all practical purposes unable to participate in 
the market while MM was holding it.  The depth and liquidity simply 
disappear.  This is a riduculous practice, and is anathema in a free 
market.
     
Market makers have learned to simulate this practice in "non 100 share" 
stocks.  They do so by the following.  MM is sitting on the offer showing a 
thousand shares at 50 1/4.  Someone SOES's him, and he fills them with 1000 
shares and the market begins to move up.  MM wishes he hadn't had to fill 
those 1000 shares and would like to buy some more before the price moves up 
too far.  So he throws out a 100 share order at 50 5/16 on an ECN.  This 
serves to kick all market orders out, and to hold off the upward move in 
the price long enough for MM to accumulate additional shares near 50 1/4, 
either on an ECN, Instanet, or elsewhere.  This too is a ridiculous 
practice in a free market, but it will become the norm if the Minimum Quote 
Size rule is passed.
     
I have heard rumors that the NASD is relying on a study it performed that 
showed that the "100 share pilot program" had no effect on market depth or 
liquidity.  If some study shows this fact, it is a joke.  Anyone with basic 
knowlege of the market can spend an hour or two watching any given trading 
day and see that this is not true.  The Electronic Traders Association has 
performed a study which shows just the opposite.  Please give equal weight 
to it.  My understanding is that statistically, the ETA study is infinitely 
more valid.
     
     
Market makers are given tremendous advantaged in the marketplace, and they 
use them to make enormous amounts of money.  In return, they are supposed 
to provide the investing public with a liquid market in which to trade. 
Their attempts to pass this rule are nothing other than attempts to retain 
those lucrative advantages without providing liquidity of any kind.
     
I enter the marketplace each day telling myself that I am a fairly 
positioned player in a free market.  At times like these, it is difficult 
to believe that the market is free.  I look to you, as representatives of 
my government, to keep it free.  Thank you for your time.
     
                                        Sincerely,
     
                                        Christoper V. Hawkins