Subject: File No. S7-08-09
From: jay kap
Affiliation: business economics

May 5, 2009

The uptick rule of old, should stay and say just that. It is old and outdated. We lived in a world where there were spreads in stocks, whereas now we trade in a penny spread environment. If shorted properly(getting the locate and not selling naked) then shorting is necessary and essential to our markets. It provides liquidity that otherwise would not be there. I believe there is always overshooting to the upside and downside in any extreme market. In the case of what we have just been through in our markets, it was not the shorts that brought this market to its knees, it was the recklessness of our financial institutions that were self governing themselves. The fact that paper was so easy to borrow, you could have a credit score of 200 and get a loan for a million dollars speaks volumes. I believe that companies such as countrywide and others who followed these practices of lending money now and not bothering to ask questions until being questioned by the government, are the reasons the markets ended up in the position they are in today, not because of short sellers. A circuit breaker is the only thing i can think of in a penny spread environment that makes any sense at all. But that circuit breaker should only be turned on between normal market hours of 9:30-4:00. There should not be a pre and post mkt circuit breaker because of the liquidity issues during those times. You just dont seem to have enough participants to provide liquidity. You can have one print that sets off the breaker and there is no volume on a stock. If there are going to be rules for stocks on the way down, you should put rules in for the way up. We are capitalists, not socialists, not communists,not fascists. Behave like ones and the markets will reward you with the short squeeze that it seems you long for. We have no uptick rule now and the markets have rallied for 35% off its lows. When the uptick rule was removed the market did nothing for years, it was only until banks started lending to bank robbers that we found ourselves in quite a pickle-jay