Subject: File No. S7-08-09
From: Dan Dillulio
Affiliation: Trader

August 19, 2009

Regarding the "Alternative Rule":

Let's begin by saying, whatever rule is chosen, it must NOT incorporate a circuit breaker approach. You must understand the "shorts" are far more sophisticated than anyone else. They have the technology advantage, they appear to have relationships with the press, potentially in exhanges also (just go look at the BUSTED TRADE scam over the last few years).

The "Shorts" will find a way to utilize the cicuit breaker approach to their advantage. One obivous way is that they will have a REAL comfort level that all BUYERS will vanish until the 10% circuit breaker is hit. This will make them even more aggressive between 5% to 10%. Also, each stock has a different daily volatility range. Some stocks trade on avg (from low to high) 2% a day. While some trade over 20% a day (from low to high) on avg. So how can a flat rate circuit breaker work?

Realize that you are forcing the shorts to place orders on the ASK. I would think that this would tighten spreads, as well as providing REAL liquidity.

I think the UPBID rule makes sense, but the Circuit Breaker must not be implemented.