From: Alex Wang []
Sent: December 26, 2004
Subject: File No. S7-23-03

Dear Mr. Katz,

I have been a proprietary trader (primarily Nasdaq securities) for over two years. It has come to my attention that the SEC has proposed Regulation SHO, under the Securities and Exchange Act of 1934. The change that concerns me the most about Regulation SHO is the institution of a new uniform bid test rule allowing short sales to be affected at a price one cent above the consolidated best bid. This differs from the current Nasdaq rule, which prohibits short sales at or below the best bid when the best bid displayed is below the preceding best bid. Yet, it seems that market makers will still be able to short at whatever price they wish. How can this not have a negative impact on everyday investors? It clearly puts everyone at a disadvantage to the market makers. How can the SEC justify allowing market makers to short at any time while not allowing average investors and professional traders, not involved in market making, to do the same? This would be a gross injustice in the part of the SEC and would turn back many of the gains the “average” investor has gained throughout the years.If anything, I think there should not be any bid test requirement. If any market maker or ecn wishes to buy stock at a certain price, and I wish to be short the stock at that price, why shouldn't we be able to execute against each other?

Alex Wang