Date:    5/27/98 11:30 AM
     
     
Dear Mr. Katz:
We are writing to express our concerns regarding the proposed primary 
market maker standards.  We have reviewed Release No. 34-39819; File No. 
Sr-NASD-98-26 and have the following comments to offer. 
     
We believe that the proposed standards, which are highly complex, are 
unnecessary in an order driven market.  We do not agree that the "Net 
Liquidity Ratio" in combination with the proportionate volume and 
proportionate trades test is an accurate indication of "responsible 
market making".  In fact, we are concerned that these formulas are 
anticompetitive and will unfairly advantage the large wirehouses over 
other market makers.  For example, one possible result could be the cost 
of entering the marketplace becoming too expensive for smaller firms. 
Another possible result may be fewer market makers in the larger NMS 
securities as the potential for attaining primary market maker status 
under this rule would be minimal.
     
Secondly, we are concerned with the underlying premise of this proposal. 
By imposing primary market maker standards onto the marketplace, Nasdaq 
creates an environment where some participants are afforded "privileges" 
under certain rules (i.e., short sale and registration rules) while 
others are not.  We firmly believe that the market is better served by 
maintaining a level playing field where each market maker is afforded 
the same obligations, the same opportunities, and the same expectations 
of compliance with industry regulations.  We do not believe it necessary 
to "reward" or to "penalize" market makers based on the number and type 
of trades they print within a given time period.
     
In closing, we fail to see how imposing this standard will significantly 
improve the marketplace or the liquidity of the marketplace.
     
     
Sincerely,
     
Nicholas Karos
Manager, OTC Trading
Managing Director
     
------------------------------------------------------------------------------
     
If you are not the intended recipient, please notify the Sender. 
Non-business opinions may not reflect opinions of Piper Jaffray 
Companies (PJC).  Distribution or other use of this information 
is prohibited without written consent from the author.
PJC reserves the right to monitor all e-mail.
     
------------------------------------------------------------------------------