Subject: File No. S7-24-04
From: Robert L Stevens

July 9, 2004

July 9, 2004


Ladies and Gentlemen:

The proposed rule needs to be amended before put into place by the commission.

Restrictions on transfer of securities are a matter of state corporate code, and the rights of the corporation and its stockholders are a basic matter of state law. The rule itself, by attacking the agent of these companies, attempts to circumvent the rights of the Issuer to control its own destiny and protect its shareholders.

This rule is a sneak attack on the public company itself, attempting to compel them to work with DTC, rather than addressing the inherent issues and problems with DTCs automated stock borrow program, which, according to a recent court filing, has been known to loan the same share to more than 10 brokers at one time.

A few years ago the SEC tried to impose a rule that an issuer would be required to have a trading class of COMMON stock before they could list subsequent issues such as Preferred, Class B, or warrants. This case ended up with the rule being reversed by the United States Supreme Court, as this again, was a matter of Corporate Code and not a matter of federal rule making.

If adopted and passed without the change we recommend, this matter will, without question, end up being reversed in court, since the Commission, in an attempt to protect DTC and the large industry players, create a rule set that is pro-industry and anti-issuer and shareholder, in an area that is clearly mandated and regulated by state corporate code.

Our recommendation to the proposed rule change is to allow a company to offer other electronic settlement options as an exemption to the rule, that is, provided the Issuer can demonstrate capability to settle transactions in electronic / book entry form for the street that it would be deemed as compliant with the Rule.

This change to the rule also addresses something that is a very distinct possibility competition for DTCs billion dollar business. The SEC has created and continues to create a monopoly in the true Anti-Trust definition of the term, in the form of the privately controlled DTC, and what is needed to insure the speed and settlement goals of the commission is to allow for competition in this marketplace.


Robert L. Stevens
X-Clearing Corporation


cc: US Senator Wayne Allard
Annette Nazareth Director, Division of Market Regulation