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December 23, 2003 Mr. Jonathan G. Katz
RE: File No. S7-23-03 Dear Mr. Katz: I am writing to you to express my sincere disappointment over the proposed Regulation SHO. I am a professional trader employed by Trillium Trading, LLC. A new uniform bid test allowing short sales to be effected at a price one cent above the consolidated best bid would be wrong for several reasons. In a time when corporate scandals and shell companies are running rampant, short selling has become a significant component of the efficient market. Putting restrictions on short selling in the face of these scandals only benefits the criminals. Short selling is already an illiquid practice, due to the inherent security loan made in the transaction. The addition of Regulation of SHO will put a tax on short sellers. This will eventually lead to less short selling and will allow inflated stock prices to remain inflated. The uniform bid test is biased in its design. Allowing market makers to be exempt from the proposed rule truly hurts the "little guy" (i.e. individual and retail traders). Market makers in this day and age hold very little inventory and exert tremendous intraday pressure on stocks. This new rule gives them an unfair advantage at the expense of the retail/individual investor and trader. In conclusion, the proposed regulation SHO would definitely have an adverse impact on trading, and on the livelihood of many professional traders. The past three years have shown the individual investor just how devastating market manipulation can be. Regulation SHO does nothing to help efficient markets rid themselves of the hype and schizophrenia. I strongly urge you to reconsider the proposed Regulation SHO. Sincerely, Thomas J Roklan |