Subject: File No. 4-602
From: Jason Fournier
Affiliation: Investor

June 20, 2010

This comment is about the erroneous trade rules. I think the SEC needs to also look at pre and post market sessions as well and make the exchanges have clearly written rules to follow for breaking trades. They currently have too much discretion. In particular, I have been told by my broker dealer that the posted "RULES" by Arca and Inet for breaking trades are merely guidelines and they do not necessarily have to follow them. I have been on the favorable side of a trade away from the market and I have been on the unfavorable side. I have had the exchanges break trades that were in my favor but according to their posted rules these trades should not have been busted. I have also had unfavorable trades that the exchanges chose not break, which according to their posted rules should have been busted. I would say more times than not they make the correct decision, but allowing them to have the ability to deviate from the posted rules when they want to is unacceptable. The biggest loophole they have is to say there was news on a stock so we are or are not breaking these trades. Their rules say if there is news on a stock, that is a determining factor in whether or not they break a trade. Well I have sold shares of a stock that was bought out only to see the stock a few minutes later trade 25% higher ticker FUN. They chose not to break this trade which I dont understand because if ever news would apply as a reason to break a trade I would think it would be here. I have also had trades busted that were in my favor like the RMBS tank and recover. This was busted because of a move that was caused by news. So I bought RMBS when it plummeted then I sold it shortly after. Then the exchange breaks the trade and I am now illegally short and losing money when I was merely providing liquidity when it was desperately needed. I get punished for that. My firm charges us a fine of if we are illegally short, $100.00 so its a double whammy when I did nothing wrong. So it is heads I lose tails they win. There needs to be firm rules in place for this that all can understand and can then trade accordingly. Allowing exchanges to use discretion on which trades to bust and which not to bust opens the door for special interest to receive favorable decisions and your average investor/trader to get screwed. The exchanges along with the rest of the financial community have proven with their past actions that they can not handle the responsibility of discretion. As well I do not see any benefit to allowing them this discretion. I would also like to say there is no such thing as an erroneous trade. Somebody entered those orders and all trades should stand. Stop bailing out the malfunctioned algos that caused the problem to begin with. This is the equivalent of the banks taking unnecessary risk because they will be bailed out. Let me go write a wildly aggressive program that I know if it malfunctions my risk is limited because my bad trades will get busted and I get out of jail free.