January 7, 2010
I have previously submitted three comments, all with the same theme which is characterized as follows:
"There are a number of avenues that allow short selling which have never been subject to a tick test. Some of these actually allow the trader to execute leveraged short selling by buying a product.
When the SEC implemented Regulation Sho, the tick test was dropped for at least 7,000 listed stocks. The regulation essentially democratized short selling.
If the SEC reimposes a tick test on these 7,000 stocks, sophisticated traders will in no way be restricted from executing short sales".
I served on a committee that furnished information to the "Brady Commission Report on the Crash of 1987". It is essential that the SEC recognize that amending Regulation Sho , would drive traders towards increased use of short sale avenues that don't require a tick test. Use of indexes would increase which could dramatically increase volatility. Is the SEC ready to take that risk?