Subject: File No. S7-10-10
From: Julia J Cauthorn
Affiliation: President , Texan Capital Management, Inc.

May 28, 2010

Because of the amount of money being spent setting up computers to get physically closer to markets, I assume that high frequency trading is extraordinarily profitable. The practice is now reaching down to family offices. I heard of one which trades $300 million a day and their longest holding period is nine seconds.

The result is that the American public -- and many of our clients -- have become wary of the equity markets and think that the deck is stacked against them. They intensely dislike volatile markets and are willing to have a negative return, after inflation, on a substantial portion of their assets which are invested in cash equivalents. If the old short sale rule were put in place, things might change. Alternatively, a tiny tax on shares traded, or trades in general, might discourage more gambling. I thought one invested in the stock market, gambled in a casino and played golf, not the market.

Can the SEC get revenue and rates of return numbers from some of these participants? If they're all profitable, this is a zero sum game. The high frequency traders and market makers are the winners and everyone else loses.