Subject: File No. S7-06-03
From: Steve Wilson
Affiliation: Individual Investor

October 2, 2006

October 2, 2006

Ms. Nancy M. Morris, Secretary
Security and Exchange Commission
100 F St. NW
Washington, DC 20549-9303

File No. S7-12-06

Dear Secretary,

On September 29, 2006 a comment letter was posted by Steven Katz, General Counsel of Citigroup Derivatives Markets Inc., a registered options market maker and one of the largest market making firms in the "Industry" as per their footnote. Note that this comment letter, along with most of the other securities industry comments have been submitted after the September 19, 2006 comment period ended so I fully expect this comment letter to be grandfathered in and posted on the public record.

A paragraph containing the following was contained in that comment letter posted at on the SEC web site:

"If the Proposal is approved and market makers are required to identify a stock hedge to a particular options position, liquidity in threshold securities will be adversely impacted, to the ultimate detriment of the investor. Requiring a market maker to unnecessarily close out a fail to deliver of a hedge of a pre-existing options position, or to pre-borrow shares as a result of its not executing the closeout, would cause market makers to be reluctant to make markets in threshold securities, resulting in quoting wider option spreads in such securities. The uncertainty, time, processing and expense necessary to pre-borrow and effect a short sale will by its nature affect the market makers' pricing in the option."

When are the SEC and these industry "market participants" going to figure out that "WE INDIVIDUALS" are the "INVESTORS" on the receiving end of the increased downside liquidity due to options market makers hedging with naked short positions? If wider spreads on options are necessary to guarantee them a profit then so be it. If there is lower liquidity and you want to buy some equity shares then how about bidding a little higher instead of abusing the shareholders by providing increased liquidity to the downside? If the price goes higher you will get willing sellers. Basically these "market participants" are saying that if they can't manipulate the equity market then their commissions will be less and they won't get their 20 billion dollar bonus for helping "INVESTORS" out of their retirement savings

Please stop giving Citigroup and other securities industry "market participants" a free ride on my dollar and enforce the laws and quit providing loopholes to further take advantage of individual investors.