Subject: File No. SR-NASD-2004-044
From: Bob OBrien

November 17, 2005

U.S. Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549-6561
RE: File No. SR-NASD-2004-044

Ladies and Gentlemen:

Thank you for providing the opportunity for the public to comment on this critical area of market regulation.

Let me first make a broad comment, namely that Congress was clear and unambiguous when they issued forth Rule 17A, which mandates prompt clearance and settlement of all trades, including transfer of registered ownership. They did not speak in terms of thresholds, and exceptions, or a certain elasticity in the system. They indicated that prompt settlement of all trades was a necessary condition in order for fair markets to exist, and for investors to have adequate protection from an industry whose history has not been a continuum of acting in those investors best interests.

I note with some trepidation that there is a blanket out-clause at the end of the proposed rule, which essentially enables an exception to be made whenever the NASD feels like it. Additionally, I note that rather than implementing meaningful financial penalties for violating the rule, which mandates prompt clearing and settlement, and which by definition an FTD violates, the proposed rule merely issues edicts prohibiting further violations.

Why the regulators believe that having violated this rule once, violators will subscribe to the new rules further prohibition against violating it again, and issues as its penalty the barring of yet more violation of prompt clearing and settlement rules, defies logic.

Why not try this simple solution:

1 Any participants with FTDs that exceed the T+13 threshold will be bought in on day T+14.

2 This includes market makers, as bonafide market making doesnt accommodate strategies that leave settlement failures for over T+13.

3 Any participants continuing to violate the rule once they have an FTD position in the security will be fined 30 of the value of any additional violations.

4 Remove clause G, that allows unlimited exclusions to the rule.

Again, Congress mandated prompt clearance and settlement in Rule 17A for the reporting securities market, and did not include language that read unless it is inconvenient, or unprofitable, or poses a threat to trading strategies. I would respectfully suggest that the same applies to the non-reporting market.

I applaud the NASDs creation of a semblance of order to the unchecked and rampant FTDs that exist in the non-reporting securities market. It would be more refreshing to see the re-establishment of the proposed March, 2003 amendment intended to replace NASD rule 11830 and 3210, which I believe was a simple, effective solution to the FTD problem in the reporting securities market. I commend the NASD for introducing that rule in the first place, and strongly support the re-introduction of the rule in light of Reg SHOs complete failure.

The NASD requirement that clearing firms make delivery, or take affirmative steps to make delivery, within 10 business days after settlement date for all short sale transactions, was the obvious first step towards a meaningful fix. It was a dark day that the SECs direction to abandon it in favor of the inferior SHO non-solution was followed by the NASD. Almost a years hindsight has now provided an opportunity to witness Reg SHOs utter failure in fixing the problem.

The NASD had it right the first time, and should be applauded for having drafted a workable solution.

The concessions to the industry at the expense of investors in this revision of the proposed rules is not consistent with Congress expressed wishes. It would be simple to make it consistent. I would propose that the attempt is made.

Bob OBrien