From: John Rideout [jrideout@yahoo.com]
Sent: Wednesday, March 12, 2003 7:39 PM
To: rule-comments@sec.gov
Subject: File No. SR-DTC-2003-03

I am writing in support of the proposed rule change.

As a retail trader in stocks, I believe it would be
cumbersome and costly to investors if issuers are
permitted to drop out of the book-entry transfer
system of the DTC. Were this rule change not made,
there would be additional costs to investors including
time delays in executing trades, handling and delivery
of certificates, and fees charged by brokers to handle
certificates. In fact some discount brokers are
refusing to conduct trades in issuers who withdraw
from DTC. Furthermore, it should be my right alone to
decide whether I want my shares issued in certificate
form, not the issuer. The whole point of the
book-entry system was to make more efficient the
process of stock transfer.

If the proposed rule change is not implemented, then
the stocks of issuers that exit DTC will, I believe,
become much more illiquid, due to the additional costs
and hassles imposed on shareholders. Furthermore, it
would make the U.S. stock market appear backward in
comparison to foreign exchanges which are entirely
based on book-entry transfer systems. As an investor,
I will not trade the stocks of any issuer that permits
only certificate based trading. 

It is apparent from the statements of companies who
have to date requested exit from the DTC, that the
only explicit reason for their requests has been to
prevent short selling of their stock and to cause
existing short positions to be covered. It has been my
experience that companies which are popular among
short sellers for shorting are those with the worst
business prospects, the poorest managements, and not
infrequently, corrupt and promotional managements who
are attempting by any means to pump their stocks to
levels far above fair value. This goes to the broader
issue of whether short selling should be permitted. I
believe it should be and that short selling is vital
to ensuring that financial asset prices reflect the
underlying fundamentals of the asset. The most
efficient of markets are those where shorting is both
permissable and easily accomplished as typified by the
markets for which futures contracts exist. I applaud
the SEC's decision to permit single stock futures.
With these instruments, stocks may be indirectly
shorted without reference to the affirmative
determination rule. I believe it is in the best
interests of efficient financial markets that the SEC
make shorting easier to accomplish, not more
difficult. In this regard the proposed rule change is
in alignment with the interests of market efficiency.

Sincerely,
John Rideout

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