Date: 01/30/2000 8:04 AM Subject: Comments on File No. SR-NYSE-99-47 Small Account Trader Comments on File Number SR-NYSE-99-47 I am one of the potential traders that your proposal 431 would affect, and I would like to take the time to share with you some of my thoughts on this issue. Thank you for allowing me to do so. When I first began researching "pattern day-trading" as a career change, I was shocked to find that many people did not know the first thing about investing in general, and certainly did not have an understanding of the potential hazards of day-trading. Since I had no experience investing in the markets at all, I fell into that category myself. However, unlike those with the financial resources to simply leap into the markets with guns blazing, and suffer loss after loss due to lack of adequate training and discipline; I felt that I would research the potential hazards and rewards first, before making a decision to participate. Currently, I have spent a year doing so. I have come to some conclusions regarding the viability of small account traders participating in the markets profitably. They are as follows: 1.. People with limited resources to allocate towards trading must learn to protect their trading capital from unnecessary losses in order to stay in business. 2.. They are entrepreneurial in character. They will take the necessary risks to realize their dreams. 3.. Because of their willingness to take risks, if they remain untrained and undisciplined, the majority will fail to realize their goals. 4.. There are "professionals" in this business that enjoy fleecing the flock in order to make a profit. (buyer beware) 5.. There are adequate educational resources available to anyone who wants to learn to trade successfully. I understand that buying on margin is borrowing money that must be repaid if loss occurs. I also understand that people who do not manage their finances well, yet get caught up in the fever of becoming financially independent through day-trading are likely to suffer great financial harm if allowed to borrow beyond their reasonable ability to repay the debt. Especially if they remain untrained and undisciplined. The issue certainly does not appear to be one of how much money is in one's account, but rather one of education, and the ability to repay debt. Why not allow one's credit rating to be tied to one's trading account such that you are only allowed to trade from a cash account if you do not have adequate resources to repay the losses that you incur. Limit the amount of margin allowed in margin accounts to the ability to repay debt. Banks routinely limit the amount of capital they allow small business owners to borrow based upon their perceived ability to repay the debt. In a very real sense, "position day-traders" are small businessmen and women. If you wish to protect the ignorant from their lack of knowledge, there are some things that could be done to ameliorate their losses. Many of the horror stories that have been told by the untrained trader are a result of people placing market orders without understanding the implications of having done so. Again, if one's credit rating is tied to the trading account, then instead of allowing a trader's market order to over extend their financial resources the order would simply be cancelled by the account holders broker when the credit limit was exceeded due to the move in the stock's price. At that point unnecessary loss is avoided and the untrained, undisciplined trader would call their broker in order to find out what happened only to be versed on the virtues of using limit orders when entering a position. I am sure that you know that people with large accounts lose a lot more money than do the small account holders due to lack of training. Simply because they have more money to lose. I fail to see how raising account balance limits to $25,000 dollars and doubling margin percentages will protect traders from their ignorance if they do not obtain the necessary training to make prudent decisions in the market. People with $25,000 dollars in their account and a 4:1 margin ratio and inadequate knowledge are poised for financial disaster even greater than the smaller account holder who is currently limited to a 2:1 margin ratio. Education seems to be the answer to me. That and reasonable financial restrictions that do not allow small accounts to borrow beyond their means. Setting up a margin account with a broker should be limited by the account holder's ability to repay the loan. Margin accounts exposure should be limited by their credit rating. When an account holder's limits are exceeded by the move in a stock's price, then the order should be cancelled. (Insufficient funds) cash accounts exposure should always be limited to the amount of cash in the account. If I open a cash account, then I am saying that this is all the money I am willing to risk. If that limits the kinds of orders that I can place in the market, then so be it. It really isn't necessary to force small account holders out of the business of day trading. If your desire is to protect us, then education and prudent financial limits will provide the necessary safeguards to do this. Why should the little guy be denied the same opportunities that more robust accounts have to enjoy the fruits of financial freedom? If your motives are to manipulate market volatility by reducing the number of traders, then of course this letter is moot. I encourage you to rethink your position on this matter. I am under the tutelage of someone who has long been successful as a daytrader, and a trainer of others to do the same. I understand the importance of stop loss orders and limit orders as opposed to market orders in a fast moving equity. I do not need to be penalized for the lack of others discipline. Nor does my family need to be barred from realizing the same financial rewards that any other hard working entrepreneur enjoys. Thank you for this opportunity to voice my opinion. Michael A. Johnson Leprechaun Investments