May 21, 2009
Dear the SEC:
The argument that short selling provides liquidity all the time is self-serving and misleading. In a decline, short selling in fact takes away liquidity. It is the buyers who would provide liquidity.
In the old days, when the spread was wider, it was the specialists and arbitrageurs that provided liquidity. When trading became decimal, liquidity has been reduced, because there is no incentive for these players to stand in front of the incoming train. That is why volatlity has increased sharply in recent declines.
Please do the right thing. Bring back the uptick rule quickly and level the playing field.
Please also stop the thievery and enforce the rules against naked short selling. The SEC should not abet the thieves.