From: Mike Ianni [ianni@rogers.com]
Sent: Tuesday, November 18, 2003 1:57 PM
To: rule-comments@sec.gov
Subject: Release No. 34-48709; File No. S7-23-03

Proposed Rule:
Short Sales
Securities and Exchange Commission
17 CFR PARTS 240 and 242
[Release No. 34-48709; File No. S7-23-03] 
 
 
4A. Operation of the Uniform Bid Test
 
 
Q. Would the alternative test allowing short selling at a price equal to or 
above the consolidated best bid if it is an upbid better fulfill the goals 
of short sale regulation? 
 
 
A: Yes.  I believe that it would be in the best interest of the marketplace 
to allow short selling on upbids rather than the bid +.01.  The latter will 
reduce liquidity, as in such circumstances short sellers can never get 
instant executions.  This is not only an issue from the standpoint of the
short seller but also from the standpoint of buyers who have posted the best 
bid (on an upbid).  Under your proposed rule you will have many situations 
where the marketplace will have opposite orders (buyer/short seller) 
attempting to trade at the same price but can't because of the proposed bid 
+.01 rule.  Since the upbid rule does not violate the rationale for the short 
sale rule then why impose bid +.01 at the expense of liquidity in the marketplace.  
This upbid method has ample protection, effectively preventing short selling 
to drive the market down, while allowing maximum potential liquidity. 
 
 
V. Pilot Program
 
Q. Is the proposed rule temporarily suspending the short sale price test 
for liquid stocks appropriate? Are liquid stocks more difficult to manipulate 
through short selling?

A: Yes and Yes.   It is about time a pilot like this took place.  

 

XIV. After Hours Trading 

 

Q. Does the consolidated quote information that is collected and published 
after hours provide sufficient information to allow short selling after hours 
at a price above the consolidated best bid, or should the rule impose a fixed 
reference point above which all short sales must be effected, such as the 
consolidated best bid at the close of the regular session? 



A. Yes, there is enough information to allow the same short selling rules 
in the After Hours Market.  As I have suggested above, the best method would
be the upbid method.  However, I believe that the SEC could also allow short 
sales above a certain price (i.e. 4 PM close for POST trading and the previous 
nights 6:30 close for PRE trading).  The SEC could allow the ECN's to choose 
which method would best suit their needs.  Once again either rule would not 
violate the spirit of Rules 10a-1 and 10a-2.

 

 

thanks,

Mike Ianni