From: Coreina Chan [coreina_2000@yahoo.com] Sent: Tuesday, December 30, 2003 11:03 AM To: Rule-comments@sec.gov Subject: File No. S7-23-03 December 24, 2003 Mr. Jonathan G. Katz Securities and Exchange Commission 450 Fifth Street, NW Washington, DC 20549-0609 RE: File No. S7-23-03 Dear Mr. Katz, I am a registered representative in a small trading firm. I have over four years of trading experience in NASDAQ securities and almost three years of trading experience in NYSE securities. I disagree with many items in Regulation Sho of File No. S7-23-03 and am writing to contribute my feedback to the proposed short sale rules. I am grateful that the SEC is seeking comment from the trading community, and I thank you for taking the time to read this letter. 1. My primary concern is with the Commission's directive of using short sale restrictions to mitigate a declining market. In an uptrending market, there are no exchange-wide restrictions as to how far through the offer a bullish speculator may pay in order to acquire stock. There are no restrictions limiting a bullish speculator to buying stock on the bid. (Whereas the proposed bid test would in effect limit many short speculators in one-cent spread stocks to acquiring shorts on the offer.) And the SEC does not suspend trading activity when the market has advanced severely in a specified period of time. I feel that the SEC's proposed bid tick test, and its proposed suspension of short-selling in "severe market delines," expresses a clear bias for the long speculator. In my opinion, "preventing short selling at successively lower prices" is an ill-directed goal. I feel the SEC would be over-interfering in passing rules that favor any one direction of the market, and I urge the SEC to maintain a transparent and orderly market for both the long and short speculator. 2. On that note, I don't think there should be an exchange-wide bid test rule at all. When a trader puts in a bid, he is communicating to the entire market the price at which he is voluntarily willing to get long a stock. If a seller smacks his bid at that price, the buyer was literally asking for it. The buyer is volunteering to buy stock at that price. Why penalize the buyer along with the short-seller? Furthermore, I feel that the proposed bid test provides less transparent-minded traders an opportunity to place fake bids creating fake supports, knowing that they cannot lawfully get hit when short-selling is restricted. Instead of shielding these traders, the SEC should abandon the bid test, and hold traders accountable for their conduct on the bid in a declining market. The risk of getting hit would encourage traders to enter meaningful, honest bids. 3. While I applaud the proposed pilot program suspending the bid test rule in specified liquid stocks, I ask the SEC to consider opening the pilot program up to more stocks. I feel that exempting only one third of the Russell 1000 Index's most trade stocked is not adequate to gather accurate data for drafting a final short sale rule. Once again, i thank you for taking the time to read this letter, and hope that my feedback will help shape the final short sale ruling. Sincerely, Coreina Chan -------------------------------------------------------------------------------- Do you Yahoo!? Find out what made the Top Yahoo! Searches of 2003