Subject: File No. S7-21-09
From: Jerry Flores

October 3, 2009

This issue undermines transparency and fairness in the marketplace. If any participant has an advanced look at orders before others who publicly display quotes, and at the same time do not have to publicly display their quotes and take advantage of the information to facilitate trades is violating fairness and transparency. This is basically frontrunning. This information should be available for all market participants to view for a fee also. Market participants pay fees for real time data and other products. we are not getting what we pay for when flash orders are involved. This issue of paying fees for realtime data to vendors, needs to be evaluated further if flash orders continue. Furthermore if these orders are not transparent, position size limits and extra fees should be considered due to the tremendous profits being made by institutions at the publics expense.
Flash orders definitely discourages public diplay of trade interest in the marketplace and will continue to do so. Flash orders in the options market should be evaluated similarly and also paying special attention to the relation between the spread of the contract and the flash orders. As we know the payment for order flow has for years moved from equities to the options floor, due to the wide spreads where profits are magnified by market makers. The spread on the contract can be monitored for manipulation as an order is flashed to the certain participants. Other factors such as volatility can be observed also. Evaluation should seriously be considered specifically in the new leveraged ETFs that are coming out at a fast rate. In an economy where we are trying to gain back the investors confidence in our financial markets, we need to have these issues work for all of us and not only a small percentage of participants. Although wall street will always be working on discovering new ways to bend the rules, it is great to know that the SEC has upgraded their staff with new units to monitor risk in the financial arena. This is critical for investors and the future of the market system.

Jerry Flores
San Jose CA.