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Mr. Jonathan G Katz
December 26, 2003 File No. S7-23-03 Dear Mr. Katz: As a registered representative and licensed trader, I am writing in response to the proposed Regulation SHO under the Securities Act of 1934. This proposal seems to be contrary to the very nature of some of the most fundamental objectives of a balanced marketplace, especially such elements as market efficiency, fairness, liquidity and transparency. The single most important aspect to any marketplace should be fairness to all market participants. Under the proposed regulation, the SEC is proposing the institution of a new bid test rule. This new rule would give market making firms an extremely unfair advantage. Essentially, they would have the tremendous opportunity to reach liquidity that would simply not be available to the smaller, individual investor. The ability to reach liquidity on an even playing field as every other market participant seems fundamental to very existence of any fair marketplace. The approval of this proposal would directly put into jeopardy the NASDAQ marketplace's most basic goals of efficiency, fairness, ability to reach liquidity and market transparency. Simply put, having a system that protects one participant at the expense of another cannot and will not work. The SEC is proposing that the price at which a given stock can be shorted would be limited to one penny above the best bid. The proposed changed would cut off buyers from sellers, essentially creating a market place where there true transparency and true liquidity would be endangered. Buyers should not be estranged from and sellers should be able to reach bidders, regardless or a preset rule limiting the prices at which the shares can trade. Should this rule pass, the efficient, fair, liquid and transparent marketplace on which all investors depend would be put in great danger. It is my hope that the SEC realizes the severe repercussions of such a rule and continually works to protect the rights of all investors, both large and small. The SEC's consideration of this matter, with your direction, will be greatly appreciated. Thank you very much in advance. Sincerely, John J. Raffaele |