Subject: File No. S7-02-10
From: Sean Murphy
Affiliation: Grace Hall Trading, LLC

September 29, 2010

To whom it may concern,

Uncertainty in the market place is a very big negative. It is difficult to asses ones risk, when the exchanges do not lay out the rules.

The move to add 10% circuit breakers is a step in the right direction, but doesn't go far enough. If a 10% move warrants a halt in a stock, then why accept any orders outside of the 10% band?
As soon as a stock hits a 10% threshold, trading should be halted for 5 minutes, all other orders should be canceled, and there should be an opening auction process to begin trading again.
At the moment the exchanges are creating havoc by accepting orders that clearly, after review will be busted...why are the exchanges accepting these orders in the first place???!!

Another suggestion. Exchange rebating for volume simply has to stop. The unintended consequence of this practice is massive volumes and quotes that otherwise would not be there.
Bandwidth is being gobbled up by this as well. In addition, small handful of deep pocketed players "own" this trade, and are making 100s of millions (many believe that the exchange rebate pool is about $1 billion annually). All you have to do is take a look at the activity of symbol C. Citicorp has a daily range of about .04 , yet trades over 300,000,000 shares daily. It is not unusual to see 15,000,000 bid for and 15,000,000 offered. These are not is mostly HFT playing the rebate game which serves n purpose at all to the mkt place, and actually hinders the market place by gobbling up bandwidth.


Sean Murphy

Why don't they predetermine, for every stock, and at every moment, what orders they will accept, and simply reject orders outside of this band?
Sean Murphy
Managing Partner
Grace Hall Trading, LLC