Subject: File No. S7-10-04

January 26, 2005

Please note the following from this Nasdaq link. The following message was related to the January 20th 2005 network issue that affected NASDAQ trading. I feel it is a prime example as to why a government mandated CLOB would hurt our markets:

(Yesterday at 9:35 a.m., Eastern Time (ET), NASDAQ experienced a failure of one of its network switches. The switch problem was resolved quickly; however, participants continued to experience intermittent issues with quote dissemination and trading throughout the day.

In addition, NASDAQ had some intermittent processing and routing issues in certain stock ranges, affecting approximately one quarter of securities. Furthermore, these issues adversely affected Brut’s performance during the last 20 minutes of the trading day.

NASDAQ has rectified yesterday’s problems, and is ready for trading today. We apologize for any inconvenience these issues caused…………………………..)

Once I identified that these issues were happening, I quickly routed all of my trading to other market centers away from SUPERMONTAGE and BRUT ECN where the problem resided on and off throughout the trading day. As stated above: Not only execution routing was affected, but quotes on the book became stale and un-executable. Under a government mandated CLOB system, trading would be at the mercy of the CLOB and its ability to route outside of these ever re-occurring issues after they have happened. It doesn’t matter how updated ones technology is: The reality is that hardware fails and problems arise everyday. Implementing a CLOB is an attempt to fix an issue that competition already has been fixing on its own. I urge the commission to vote down the version of Regulation NMS that involves implementation of a CLOB style market.

Thank you once again for your time,

Michael Dilios