June 30, 1998
     
Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
     
     Re:  SR-NASD-98-26
          Primary Market Maker
     
Dear Secretary:
     
     As an NASD member, Volpe Brown Whelan & Company, LLC (VOLP) opposes
the implementation of the new Primary Market Maker (PMM) standards.  The 
Net Liquidity Ratio (NLR) methodology criteria will prevent small 
institutional broker dealers from attaining PMM status in many securities 
for two reasons.  First, broker dealers would be penalized for executing 
trades away from the inside market.  Many large institutional orders are 
executed on a negotiated basis with the customer.  The negotiated price is 
not the national best bid or offer (NBBO) but rather a price negotiated 
with the customer given the size of the order and the liquidity of the 
issuer?s stock.  Each negotiated order increases the denominator but no 
concomitant increase in the numerator when calculating the NLR.  Second, 
manually reporting trade executions into the Nasdaq system may further 
penalize broker dealers.  Unlike SOES, SelectNet and proprietary execution 
systems, VOLP does not have the technology to instantaneously report manual 
trade executions but rather reports trades into the Automated Confirmation 
Transaction Service (ACT) within 90 seconds of execution.  Many large 
institutional orders which are not executed on a negotiated basis are 
average priced with multiple manual executions necessary to complete an 
order.  If during the time of a manual execution and the time of reporting, 
the stock price moves down in the case of a customer buy or up in the case 
of a customer sale, the trade would not be recognized as having been 
executed at the NBBO.  Again, the NLR would be reduced and the small 
institutional broker dealer would be penalized.
     
     Small institutional brokerage firms frequently represent a
disproportionately large percentage of the average daily volume in many 
NASDAQ securities where the firm has a corporate finance relationship with 
and provides research coverage on the issuer.  If such firms could no 
longer avail themselves of the market maker exemption from the short sale 
rule because of a loss of PMM status, the liquidity of many securities 
would be adversely effected.  In addition, the ?New Nasdaq Proposal?, 
SR-NASD-98-17, allowing only market makers qualifying as PMM to sponsor 
institutional access to the Nasdaq system, would further impact the ability 
of small institutional broker dealers to compete in the Nasdaq marketplace.
     
     VOLP urges the Commission to consider the effect on the liquidity of
the Nasdaq marketplace if, as a result of a formula, small institutional 
broker dealers are precluded from attaining PMM status.
     
                         Sincerely,
     
     
     
                         Steven D. Piper
                         Compliance Officer