Subject: File No. S7-08-09
From: John A Krob
Affiliation: Retired

May 5, 2009

We need to reinstate the uptick rule because "fear of loss" on the downside is much stronger than "fear of a missed opportunity" on the upside. The goal is orderly and stable markets. Opponents argue that regulation should be symmetric (long and short), but I strongly disagree for the simple reason that the risks of market disruption are not symmetric. The risks to orderly markets of creating a condition of "panic selling" are greater than those of "panic buying".

Furthermore, naked short selling of all securities should be prohibited because it distorts the supply-demand balance in the market. You should not be able to transact in a security unless, at the time of the trade, you have the ability to deliver it. Otherwise, you are creating artificial supply and potentially compound the potential negative impacts of a falling price.

Clearly, the market study done for removing the uptick rule in the 2004-2006 timeframe did not encompass a period of highly stressed market conditions. Unfortunately, we subjected society to such conditions in 2008 without an uptick rule with disastrous consequences. So called "bear raids" on securities were easily orchestrated by relatively few market players leading to gross distortions and an exacerbation of already stressed market conditions.