Subject: File No. S7-02-10
From: Patrick Caito

April 13, 2010

The world is moving forward by increasing transparency, the securities industry has taken the opposite route by allowing the practice of sub-pennies, flash trades, and dark pools of liquidity.
The term, Dark Pools of Liquidity says it all. Its hidden which is the complete opposite of transparent. Flash trades are the equivalent of front running, jumping in front of the NBBO. Sub-pennies have taken away what little was remaining of the meager one cent spread. The term NBBO is no longer valid since the real bids and offers are now hidden.
All this takes liquidity providers out of the picture. When the stock market starts declining, the self adaptive algorithms will stop taken bids accelerating the decline.
The new structure has no incentive for traders to take daily risk which provided liquidity and price improvement for retail customers.