Subject: File No. S7-12-06
From: Robert Almy

April 15, 2007

In order to ensure orderly markets, a rule was established by the SEC that requires that every short sale transaction be entered at a price that is higher than the price of the previous trade. This rule was introduced in the Securities Exchange Act of 1934 as Rule 10a-1. The up-tick rule prevents short sellers from adding to the downward momentum when the price of an asset is already experiencing sharp declines.

Further, main purpose behind Rule 80A, under the NYSE, is to reduce the number of program trades occurring during a trading session.

Im opposed to eliminating the up-tick rule. Unless and until the SEC can stop naked short selling and failure to delivers, the up-tick rule should remain in place. If there are more sellers the market price will continue to decline and the traders who shorted the stock will in effect be MANIPULATING the market for profit. The up-tick restriction requires a buy to offset a short sell to prevent ARTIFICIAL selling pressure in the security.

Tick restrictions on shorting seem to improve liquidity. See,

Logically, if a market starts to decline, short position sellers will sell. However, the more short sellers that sell their stock, the more the stock slides downward. The more the stock slides downward, the more investors try to sell, so on, so forth. Its a vicious cycle, and that was what caused the stock market to crash, so it became very important to prevent that from ever happening again. This isn't true with all stocks, but it is true with every volatile stock, the one's that are most likely to have the biggest jumps and dips.

Complaints that the up-tick rule may cause a large "slippage" in the entry price are a non-issue. First by issuing limit orders, instead of market orders, to sell short, your order can only be filled at the price you specify, or a better price. It may, or may not, be filled, but slippage wont occur.

Next short selling is not a right; its a privilege. This privilege can only be extended if the rightful owner (with his/her knowledge and consent) loans the asset or security to another party to sell short.

The up-tick rule should remain in place for all stocks, the smaller the market cap the higher the up-tick minimum. Any stock that is not in the SP 500 or the Dow should have an up-tick of at least 10 cents higher.