Subject: File No. S7-18-04
From: R. Gerald Baker

June 4, 2004

Jonathan G. Katz
U.S. Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549

Re: Proposed Rule Changes of Self-Regulatory Organizations
Release No. 34-49505 File No. S7-18-04

Dear Mr. Katz:

As a retired compliance executive with over 40 years of industry experience and as a consultant on compliance and regulatory matters, I appreciate the opportunity to provide comment on the above captioned rule proposal Rule Proposal. The Rule Proposal is intended to improve and increase transparency in the rule-making process for Self-Regulatory Organizations SRO. The proposed changes to Rule 19b-4 include the following requirements for SROs: i proposed rule changes would have to be filed electronically through a web-based system with the SEC ii post all proposed rulechanges and amendments on the SROs public website no later than the next business day after filing with the SEC and iii post and maintain a complete and up-to-date version of their rules on their public websites. SEC approved rule changes and those effective-upon-filing would also have to be posted on the website no later than the next business day after being approved or becoming effective.

I believe these proposed changes are long overdue and I strongly support them. They will provide the industry and other interested parties with adequate opportunity to assess the impact of the proposes rule changes on the industry and individual members. Additionally it will level the playing field for all SROs and their rule making process. It will improve the ability to compare one SROs rule changes with existing or proposed rules of othe SROs. Most importantly itwill create a rulemaking environment in which comment and input can be provided at the onset of the process rather than as is often the case after the process is well underway.

Given the number and velocity of SRO rule change proposals, it is critical to provide ample time to consider all of the issues that occur with anyrule change. The impact on resources both personnel and technology, development of procedures and controls, implementation, education and training to name just a few are issues taht need careful assessment and consideration before meaningful comment can be made. the earlier this can be done leads to more meaningful and corefully considered input which in turn improves the quality and effectiveness of new rules.

There are however, other issues that are not addressed in the Rule Proposal which if not addressed will limit the effectiveness and benefits of the proposed Rule. I believe it is important to consider them and to use this opportunity to make them a requirement for all SROs. They are:

1. SROs should establish procedures that invite comments and input from its members before filing any proposed rule change withe the Commission. Comment and input should not be limited to advisory groups but should be available to all members.
2. In addition to posting the most current and complete set of rules to their websites SROs shouldbe required to post and cross reference all interpretaions and information memos on their websites.
3. Establish a joint SRO Regulatory Rule Committee to coordinate proposed rules and to identify rule inconsisitencies before filing them with the Commisssion.
4. Rule inconsistencies and the basis for them should be included in the 19b-4 filing.
5. Gather and consider potential administrative, operational and expense burdens before the filing of a proposed rule change, and attest in the filing the effect of those costs.

The issue of rule inconsistencies and rule harmonization among SROs is still one of great concern and not adequately addressed. The industry and others have raised this issue a number of times in recent years and have even proposed concepts to address them. Moreover, the GAO conducted an independent review of this issue and issued its own report recommending a number of changes. The GAOs report should be carefully considered by the Commisssion in connection with this Rule Proposal.

Thank you again for the opportunity to comment on the proposed rule and for considering them.

Very truly yours,