140 West End Ave. #17E
New York, N.Y. 10023

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

Mr. Katz,

My name is Eric Knight and I am writing to you in regards to the new Regulation SHO. As both an individual investor and a registered representative, I feel that the proposed rule change would be detrimental to the "small" investor, as well as threaten the true meaning of a "fair" marketplace.

Let me first start out by saying that I am in total agreement with the idea that all short sellers much locate securities before selling a particular stock. But, I am a firm believer in the fact that if there is an "up arrow," there is no restriction on the price a short sale may be executed. With Regulation SHO, the price at which a short sale can be executed will be one cent above the best bid. Can you truly say that this will promote a fair marketplace. If I have located stock to borrow, and have found a buyer willing to pay a certain price, why prohibit the transaction?? You are denying me my right to sell the stock to a buyer agreeing to pay my selling price. It is two parties willing to execute a transaction at a specific price. Taking away this ability will do more harm than good for the small investor.

The biggest problem that I have with the propose rule change involves the exception given to Market Makers. From what I understand, those Market Makers who are exhibiting "bona fide" market making activities will be exempt from the rule. Are you kidding me? With all of the recent Wall St. scandals involving major Market Makers, can you really call their activities as of late bona fide? It's bad enough that they already have the ability to short on a down tick and remain anonymous while using the SIZE symbol. Whether in error or not, I have seen what Market Makers can do to a stock while constantly shorting on a down tick. They already have a huge advantage over the small investor and this will only widen the gap between them.

I'm sure that this letter, coming from a small investor, will not carry a lot of weight when you make your final decision regarding Regulation SHO. I just hope that there are a lot more people like me out there who are just as upset with the proposed rule changes as I am. It's hard enough as it is competing with all of the big boys on Wall St. and I feel we are already at a disadvantage. Thank you for your time.


Eric Knight