Subject: Short selling proposal S7-26-08

September 24, 2008

Good Morning,

Many market participants are not happy with the recent halt in short selling of financial institutions here and around the world. They certainly have a valid argument that in normal times the ability to short provides for smooth markets, but these are certainly not normal times.

Going forward there are a great many who believe short selling should only occur on up-ticks and virtually all agree that naked short-selling regulations need to be enforced with greater diligence.

May I offer a suggestion?

When the market eventually normalize, the up-tick rule and naked-short regulations might not even be necessary, if the maximum short position on financial stocks was limited to perhaps 25% or 50% of the outstanding shares.

In fact, hedge funds wouldn't even need to report their positions (a major issue for them) because the industry or any particular fund could not create additional price pressure once the limitation is reached.

The imposition of the limitation would effectively prevent a bear raid because the short-sale positions would be continually updated during the day and all short selling would immediately stop in that stock once the limitation is reached.

This could be a permanent regulation or subject to change depending on market conditions. All other stocks could have different short-selling regulations.


Richard F. Vulpi