Subject: File No. 4-627
From: John J Grimley
Affiliation: Institutional Sales Professional at Boutique Investment Bank

October 13, 2011

I am in support of Dodd Section Dodd-Frank Act Section 417(a)(2).

The claim that this will limit liquidity is entirely false and propogated by large firms who make money in High Frequency trading. The liquidity it creates is fake liquidity....by day traders trying to make a small spread. Without a preborrow, people with deep pockets can force a small cap stock to any price they would like.

Given its a pilot program, it is worth seeing if companies opt in and what effect it has at a minimum.

COnsider these facts:

New record of 6.65 million messages/second reached last Friday-- despite the fact that overall volumes were down. Have seen this over the year-- continuining to hit new highs of messages/second, while volumes relatively stable to slightly lower.

-"Messages" include quotes, updates, cancellations, and executions.

-In 2007, for every trade there was an avg. of 6 quotes vs. today, for every trade there is an avg of 60-70 quotes.
Markets are being flooded with more quotes that are not actually trading-- clients aren't able to access the liquidity at the price that they see on the screen, as HFTs are essentially layering the book with these quotes but simultaneously cancelling-- actual liquidity is not there so as something starts to break down you see the quote essentially crumble. Price you see in the quote is most likely not where you will be able to execute a trade
-For 2011, we estimate that 55% of the total market volume will be HFT.

There is a major issue in small cap world where intraday shorting and etf's are swinging some of these stocks based on the indexes they are in.

For that matter, I think there is a need to bring back the uptick rule and get rid of the market maker exemption as well.