Subject: File No. 4-627
From: William L Maltby

July 17, 2011

If a true level playing field is desired with retention of the retail investor, through the possibility of benefit, the unfair advantages provided larger market participants whose primary means of success is scalping the small investor must be removed. These include not only a greater level of expertise, which we can't really address, but a greater access to near-real-time complete and accurate data.

The latter issue can be addressed.

What's needed is actionable information. This can be accomplished by viewing the market action in relation to beneficiaries.

Actions occur to benefit three major groups of participants: end buyers and sellers, broker/dealers and market-makers.

For information to be actionable, we need to know the generic beneficiary (market-maker, broker/dealer or end customer) as well as the nature of the transaction.

As is currently done, providing less than 1/2 the needed information related to a short sale, legal or otherwise, market-maker or not, leaves the retail investor at a decided disadvantage in his decision-making effort. Similarly with a buy - if the buy purpose is not flagged the retail investor can not act on that information alone since the buy may be just a market-maker return to a market-neutral position.

With both market-makers and broker-dealers selling and buying in the market for both their own interests and on behalf of their clients, no actionable information is provided unless every transaction contains the following.

- generic beneficiary - is the action in response to an order or for the interests of the broker/dealer or market-maker? Generically, who is the beneficiary?
- Transact is a sell, short sell, buy, buy to cover, forced buy-in, ...

With each transaction generically identifying the beneficiary of the transaction - market-maker, broker/dealer, "end customer" - and the type of transaction - sale, short sale, buy, covering buy, forced buy - there is actionable information provided.

Currently the "transparency" provided is nothing more than increased opacity in the guise of transparency as no actionable information can be determined from the data as currently provided.

Every order should be marked as the proposal suggests, long, short, cover, ... and in addition should indicate the generic beneficiary.

If the market-maker is shorting to satisfy a received sell order for which the securities are not yet in his/her control, this would be indicated by the beneficiary field. If not so marked then it can be deduced that it is for purpose of market-making (liquidity). This then means that a covering buy should shortly be seen as the market-maker attempts to maintain a market-neutral position.

If the market-maker is buying to maintain market-neutral position, the transaction should be marked both as a cover and with the market-maker as beneficiary. If the cover is in response to a received order, that would be so indicated by a beneficiary other than the market-maker or broker/dealer.

With these relatively small changes in coding, folks like me can at least at the end of the day determine how the net short position has changed and see the effects of short-related activities on the share price and volume behavior.

Yes, it is only "rear view mirror", but that's better than nothing.

I have written some programs that process both the EOD short sales files provided by FINRA and others and the fails-to-deliver files.

Although some statistics can be derived, there is no actionable information available with the current lack of detail.

William L. Maltby