Author:  "Roy Behren"
Date:    11/18/98 5:09 PM

     
Westchester Capital Management, Inc.
     
100 Summit Lake Drive, Valhalla, NY 10595
   
     
November 18, 1998
     
Mr. Jonathan G. Katz, Secretary
     
Securities and Exchange Commission
     
450 Fifth Street, NW
     
Washington, DC 20549
     
Re: Securities Exchange Act Release No.39,844 (File No.S7-12-98)
     
Dear Mr. Katz:
     
We are writing to offer comments on the new Regulation ATS that was proposed 
by the SEC in April 1998. In particular, we wish to express our concerns 
with the proposal to require display of ATS institutional orders. We feel 
you should not adopt this rule.
     
Westchester Capital Management and its affiliates manage approximately $600 
million in assets for individuals, trusts, public funds and pension 
investors. In order to effectively manage our customers' funds, we have to 
be able to draw from a set of trade implementation strategies that allows us 
to obtain best execution in a variety of different situations. If we lose 
the ability to send upstairs orders to electronic brokers, we will lose one 
of our most useful and effective trading tools. The price swings that will 
result from large orders being publicly quoted will only compound the 
volatility that the new order-handling rules have produced. This will 
certainly cause situations where our trades will be more expensive under the 
new rules.
     
Having access to multiple sources of liquidity without having to reveal our 
ultimate intent to the entire market increases our funds' performance and 
ultimately our investors' bottom lines. To avoid the market impact that a 
fully transparent quote would have on our orders, we may have to take trades 
to less transparent dealers or compromise executions by breaking up orders 
into smaller pieces. Whatever we are ultimately forced to do, our clients 
will suffer in the form of increased execution costs.
     
For these reasons, we oppose the proposed institutional order display 
requirement and urge the SEC to reconsider adopting any such rule.