From: Blake Byczek [blakebyczek@hotmail.com]
Sent: Monday, December 29, 2003 4:08 PM
To: Rule-comments@sec.gov
Subject: File # s7-23-03
 
25 December 2003
Blake Byczek
451 E. 14th St
Apt. MA
New York, NY 10009

Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Mr. Katz,

I am writing to inform you of my opposition to File # S7-23-03 regarding
Regulation SHO, proposed by the SEC. I believe this rule to be detrimental to
both the individual investor and trader, as well as clouding efforts to create
and maintain a clear and open market. As an active Level-II trader at an order
entry firm I trade three million shares per month, and consider myself a small
market participant. The proposed changes will benefit larger institutions and
their traders, while hurting the small investor, like myself.

Regulation SHO contains a proposal that would permit short sales of a security
one cent above the best bid only. This will prohibit the natural movement of a
stock created by market participants who choose to buy or sell shares at prices
they choose. I understand certain rationale for shorting restrictions are in
place as to keep the stock from being driven down to zero, but a situation such
as that is impossible, given the quick finger of exchanges to halt stocks which
drop a certain percentage over a given period. It seems necessary to protect
those effectively long the stock, but there are no parameters in place to
protect those investors who are short a stock which runs up. If a stock dropped
fifty percent in one day certainly it would be halted before it dropped 30
percent, but I have never seen a stock halted when it gains 30 percent intraday.
So I ask if there is such urgency to protect those long the security, where is
the protection for the investor who believes the true direction of the security
to go down? That investor is in fact penalized for his or her choice. 

In regards to exempting market makers from shorting on a down tick, I strongly
disagree with their current and to be continued ability to do such. I fail to
see the difference between a 200 share order a market maker enters and a 200
share order a small investor enters. Both represent the same thing; a desire of
someone to either buy or sell 200 shares of a given security. I think it is very
unfair to grant a market maker permission to short a stock on a down arrow just
because he maintains a quote in the stock. Often times, a market maker's quote
is nowhere near the inside market when he executes these trades. Since he can
keep his quote anyplace on the book with out actively making a true free and
clear market, how is he different from a small investor or market participant
who does not have an active quote on the book? I see no difference, except that
the market maker has larger financial support behind him, while the small
investor or participant has limited resources. Given that both 200 share orders
are just that, orders, why is there special treatment given to the order that
came from a market maker? Is his order more important than the one from the
small investor? If they are truly the same orders, then both should have the
ability to short on a downtick, not just the market maker.

In closing, I strongly disagree with the proposed changes put forth in
Regulation SHO. These changes will turn a clear and free marketplace into one
where preferential treatment is given to market participants based on on how
deep their pockets are.

Sincerely

Blake C. Byczek