Subject: File No. S7-08-09
From: Aadil Farid
Affiliation: Software Engineer

September 19, 2009

Short sells create the "artificial supply" and thus dilute the value of existing investments. It also acts as a tool to drive down the prices artificially.

The golden principle of "One can not give if he/she doesn't not posses" must be followed in the field of investment as well to keep the market fair.

A short sell must be completely eliminated or preferably be replaced by 'if you want to sell short, rent or borrow the stocks first in a transaction prior to selling short". The borrowing or renting transaction must be real and must be recorded on the book and reported in real time feeds. The lender must be a party and lender must not be allowed to lend the same assets (Stocks) more than once at any given point of time.

If there's a cost associated with borrowing a stock or purchasing a 'CALL OPTION', the short sellers will be more careful in terms of selling short. Similarly the seller of CALL option must have his/her position covered before selling (writing) the CALL. This will ensure that the supply and demand will remain real.