From: Jeffry H King [jking@quakersec.com] Sent: Thursday, August 09, 2001 9:51 AM To: rule-comments@sec.gov Cc: Mmcgarry; Tom Fisher; Mfarrell; Joe DiStefano; Ermanno NYC Unternaehrer; JLukan Subject: Trading in sub-pennies Ladies and Gentlemen: The effect of trading in pennies vs. Fractions has been very negative for the process of BEST EXECUTION. It (pennies vs. Fractions ) has allowed the dealers and front runners to SUBSTANTIALLY REDUCE their risk in the front running game to the detriment of the public. Trading in less than a penny will only make the situation worse. It might make sense to allow spreads of less than a penny in LOW priced stocks (under $ 1.00) or the top 200 volume stocks.....but for the rest of the universe it will only put more money in the pocket of the front running community and the dealers. I THINK IT IS A VERY BAD IDEA. What the SEC and NASD ought to do is rule to go to a five cent spread for all but the top 200 volume stocks. It would INCREASE the risk for the dealers and front runners, thus allowing the public and institutional investors a level playing field. As the CEO of an agency only Institutional Execution Broker that does substantial NYSE and NASDQ volume, I strongly object to the idea of allowing partial penny trading. Jeffry H. King sr. CEO Quaker Securities, Inc.