April 13, 1998
Jonathan G. Katz
The Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
Dear Mr. Katz:
Edward Jones appreciates the opportunity to comment on the National Association of Securities Dealers, Inc. proposal to amend NASD Rule 4613(a)(1)(C) - the Actual Size Rule. Edward Jones is a national retail broker/dealer with 4000 investment representatives in all 50 states and, through an affiliate, Canada. Our business is catered to the individual investor and we do not have any institutional business of consequence.
Edward Jones supports the continued efforts by the NASD and SEC to improve the quality of the U.S. equity markets. We support the proposed amendment allowing market makers the right to display "Actual Size" in their quotes rather than a predetermined mandatory minimum quote size.
This rule will benefit individual investors in several ways:
1. Allowing Market Makers to reflect their actual size should narrow spreads in less actively traded stocks, thereby offering investors superior prices.
2. By affording Market Makers more flexibility to manage risk, this rule should encourage Market Makers to trade more stocks thereby adding liquidity to the market.
3. The Actual Size Rule should reduce volatility caused by day traders using NASDAQ's Small Order Execution System (SOES). As this volatility decreases, small investors should benefit by receiving better execution prices.
Again, Edward Jones supports the proposed amendment to NASD Rule 4613(a)(1)(C)-the Actual Size Rule. Thank you for the opportunity to share our thoughts and comments with you.
Bart M. Green, Jr.
Manager, OTC Trading