Derrick Liu
Trillium Trading LLC
110 Fieldcrest Ave.
Raritan Center 1, 7th Floor
Edison, NJ 08837

Mr. Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Dear Mr. Jonathan G. Katz:

I am writing to express my disapproval of the proposed Regulation SHO. More specifically, I am against the proposal that would allow short sales to be effected only at a price one cent above the consolidated best bid.

As an economics major at Cornell University, one of the first names mentioned in lecture was that of Adam Smith. He believed in the efficiency of free markets and his theory holds true in the stock market as well. The role of the regulating body of any market should be to ensure a fair and equitable environment. Restrictions on short selling, while intended to ensure a fair and equitable marketplace, accomplish just the opposite. For by instituting such restrictions, a free market is no longer present.

If customer orders via ECN's or market makers appear on the bid, then they are explicitly stating that they want stock at their bid price. A free market should allow them to get that stock at that price if someone is willing to sell at that price regardless of what price the last sale was executed at. The pilot program the SEC proposes where the bid test rule would be suspended is a step in the right direction.

The purpose of any market is to bring buyers and sellers together. A stock's price will reach equilibrium when buyers and sellers reach an accord upon a price, and it is that price that a specified stock should be trading at. Unnecessary regulations such as short selling restrictions that prohibit buyers and sellers from acting freely impede the process of a stock reaching its equilibrium point. This is neither beneficial to the buyers nor the sellers and merely creates inefficiency in the market. It is this thinking that leads me to believe that Regulation SHO should not be implemented. Instead, short selling rules already in place should be lifted altogether in order to create a free and more efficient market.

Thank you for you time and consideration.


Derrick Liu
Registered Representative