Subject: File No. S7-08-09
From: Martin E Gallagher, CFA

May 28, 2009

A few simple changes to the markets would restore confidence, lower volatility, and lessen the tumult that we have experienced over the past two years.
1. First, allow short selling only when the seller actually possesses the shares. In other words, enforce the rules now on the books and do not relax them as they only favor short term speculators.
2. Second, allow short selling, but do not encourage it. Abolish the ability of short sellers to deduct any losses on trades of less than 90 days even against other short term gains. This allows for bona fide hedging while discouraging day traders.