STA News Media : Comment Letters

Comment Letter: STA Responds to File No. S7-02-10, Concept Release on Equity Market Structure

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30 April 2010

April 30, 2010

Ms. Elizabeth M. Murphy
Secretary
Office of the Corporate Secretary
U.S. Securities and Exchange Commission
100 F Street, N. W.
Washington, D.C. 20549-1090

Re: Securities Exchange Act Release No. 34-61358 File No. S7-02-10, Concept Release on Equity Market Structure

The Security Traders Association (“STA”) welcomes the opportunity to respond to questions posed by the Securities and Exchange Commission (“SEC” or the “Commission”) on the SEC Concept Release, 34-61358 (“Concept Release”).

The STA is a professional trade organization that works to improve market ethics, business standards, and the working environment of our members. In 1975, the Congress mandated that the SEC facilitate the development of a National Market System (“NMS”). Its goal was to assure that the securities markets in the U.S. are the most efficient and liquid in the world. The STA shares the goal of achieving the objectives of the NMS. Fulfilling the promise of the NMS serves to make the securities markets more efficient and the capital formation process more robust. This in turn benefits the economy of the nation and investors at this critical time for the United States.

Given both the maturation of Regulation NMS as well as the macro financial events of the past few years, STA supports the SEC Concept Release initiative and believes it is an appropriate time for a review of the US equity market structure. The STA is pleased to respond to the SEC request for public comment.

We completely agree with Commissioner Paredes’ comment (at the SEC open meeting on January 13, 2010 concerning the Concept Release on US equity market structure):

The analysis of U.S. equity market structure should begin with the following recognition: the U.S. has high quality markets that have performed extremely well, including during the recent financial crisis. Although price declines and volatility led to losses and unease, throughout the turmoil, U.S. equity markets opened and closed in an orderly fashion and transactions cleared.

The STA concurs that a comprehensive review of the U.S. equity market should begin with this simple fact: U.S. equity markets passed their stress test in the Fall of 2008, while some other markets did not.

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Comment Letter: STA Options Sub-Committee Comments on File No. S7-08-09 Amendments to Regulation SHO, Rule 201

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14 April 2010

April 13, 2010

Ms. Mary Schapiro
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090

Re: File No. S7-08-09 Amendments to Regulation SHO, Rule 201.

Dear Chairman Shapiro:

The Security Traders Association (STA) Options Sub-Committee (Committee) appreciates this opportunity to comment on the February 24, 2010 Final rule amendments to Regulation SHO Rule 201.

STA is a professional trade organization that works to improve the markets, ethics, business standards and working environment for all our members. With over 5,200 members across North America, all engaged in the buying selling and trading of securities, the STA provides a forum for our members to share their unique perspective on issues facing the securities markets. Our members work at the local affiliate level and national level to promote investor protection, increase transparency, and help foster the world’s most efficient liquid markets. The STA Options Committee Sub-Committee is a key component of the STA Trading Issues Committee.

The committee is sensitive to the political pressures being brought to bear on the SEC in the advent of the 2008 financial crisis. And we believe no financial trade organization is more concerned about investor confidence and the impact that has on our industry. That being said we are troubled by the imposition of this rule without any “short sale exemption for bona fide Market Makers” and, specifically for Option Market Makers (“OMMs”). We understand the need for broad and comprehensive regulatory reform. But, SEC policies and rule making should encourage change and innovation that move our financial markets forward, and not burden them unnecessarily without empirical data to the contrary.

In July of 2007, after nearly 8 years of studying the issue, examining data from the Pilot, reviewing studies and analyses of its own economists and numerous independent economists, and considering the comments received in response to its proposals, the SEC eliminated short sale price restrictions. Three months later, the market made its historic highs and then the subprime mortgage and credit crisis’ took hold. During the increased volatility and steep declines (particularly, in certain financial service firms at the center of the crisis), the media, investors and corporate heads and many others pointed to “unrestricted short selling” as a principal cause of these problems. In response, between July and October 2008, the SEC issued a series of emergency orders and adopted rules to address the possible role of ‘abusive short selling’ in the extreme drop in securities prices. Fortunately at the time, they did not reinstate price restrictions.

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Comment Letter: Comment Letter: STA Comments on File No. S7-08-09; Amendments to Regulation SHO

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29 March 2010

March 29, 2010

Ms. Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090

Re: Amendments to Regulation SHO Release No. 34-59748
(File No. S7-08-09)

Dear Ms. Murphy:

On January 14, 2010, the SEC published its “Concept Release on Equity Market Structure” (Release 34-61358) and the Security Traders Association is working diligently to respond to the many important issues raised and questions asked in that document. We applaud the Commission for seeking comment on a wide range of issues relating to developments in the structure of the equity markets.

We take this opportunity to express our hope that the SEC will address these often complex, subtle and sophisticated issues with its characteristic attention to the details of good regulation and public policy, including basing its decision on the best available objective data.

The STA has enjoyed the opportunity to work with the Commission and its staff for decades, and is familiar with the high levels of professionalism that are ordinarily brought to SEC decision making.

However, we believe that the recent decision by the Commission (3-2) concerning the adoption of amendments to Regulation SHO, the short sale rule, (Release 34-59748) on February 26, 2010 are based on inadequate analysis, a lack of empirical data, and questionable rationale by the SEC. This inadequacy was noted by SEC Commissioner Paredes in his opening statement:

...there is an insubstantial empirical basis to support the Commission in adopting the rule, especially in light of the rigorous economic analysis that led the SEC to repeal the “original” uptick rule in 2007 after years of study. The Commission bears the burden to justify its rules. It has not done so in this instance.

The STA believes the resulting regulation is a less than optimal resolution to the concerns over manipulative short selling. The implementation costs will be significant. The “investor trust” this

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Comment Letter: STA Comments on S7-27-09, "Regulation of Non-Public Trading Interest"

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22 February 2010

February 22, 2010

Ms. Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090

Re: Proposed Rule: Regulation of Non-Public Trading Interest Securities Exchange Act Release No. 34-60997; File No. S7-27-09

Dear Ms. Murphy:

The STA appreciates the opportunity to comment on the Proposed Regulation of Non-Public Trading Interest, Release No. 34-60997 (“Release”).

In summary, the Commission is proposing:

1. To treat actionable Indications of Interest (“IOIs”) as quotes and subject them to the same disclosure rules;

2. To lower the Alternative Trading System (“ATS”) trading volume threshold from 5% to .25% of the total volume traded. This would apply on a stock by stock basis and would require that the ATS display its best priced orders to the public if they currently display to more than one person;

3. To require Real-time disclosure via public Reports of Executed Trades. An exemption would be provided for trades greater than $200,000 in value;

4. To exempt from the provisions of Proposals 1 and 2 above, IOIs with a market value of $200,000 made to a counterparty that are reasonably believed to represent a contra-side trading interest of equally large size.

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Comment Letter: STA Comments on FINRA SR 2009-077 - Quotation Consolidation Facility

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4 February 2010

February 4, 2010

Ms. Elizabeth M. Murphy
Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090

Re: Comments to Securities Exchange Act Release No. 60999 (File No. SR-FINRA-2009-077)

Dear Ms. Murphy:

The STA appreciates the opportunity to comment on the proposal filed by the Financial Industry Regulatory Authority (“FINRA”) to establish a Quotation Consolidation Facility (“QCF”).

FINRA is proposing to “create a QCF for OTC Equity Securities for regulatory and transparency purposes that would serve as a data consolidator for all quote data in the over-the-counter equity market.” The proposal would require all market makers to provide FINRA with all over-the-counter quotations. FINRA proposes to distribute these as a consolidated quote data stream and charge broker/dealers a monthly fee to receive the data. They also propose charging a fee for the posting of quotes on the system but against which firms cannot execute.

STA opposes the FINRA proposal because it is not necessary. There exists a private facility providing all required information on an economically sound basis. This proposal fails to demonstrate either the need or requirement for such facility. We cannot see any increased value or increase in protection for investors, or regulators, and, at the same time, this proposal comes with very substantial cost increases to all participants which will passed on to investors either implicitly or explicitly.

There already is, as a practical matter, a consolidated quotation system. Pink Quote is the de facto consolidated quotation facility as a result of its own initiative to offer services to customers. Pink Quote currently merges OTCBB quotes with its own quotes, i.e. creates a consolidated quotation feed. This information is made available to investors, market participants and regulators. Pink Quote publishes a consolidated NBBO in securities that are dually-quoted in the OTCBB and requires vendors that purchase market data from it to consolidate quotations from Pink Quote and the OTCBB. FINRA’s proposal would be unlikely to significantly increase the transparency of quotation information.
Nor does STA believe that FINRA needs to be the quote consolidator for regulatory purposes. FINRA meets its regulatory responsibilities towards Pink Quote today by making use of the quote information already provided to it by that company. Pink OTC makes all of the market data generated by its inter-dealer quotation system available to FINRA as its reporting agent for all its broker dealer customers. This is done without charge to FINRA and pursuant to the requirements of existing FINRA Rule 6330.

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Comment Letter: STA Opposes Transaction Tax Proposal - H.R. 4191

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2 December 2009

On December 3, 2009, Congressman Peter DeFazio (D-OR) introduced H.R. 4191, a bill titled “Let Wall Street Pay for the Restoration of Main Street Act of 2009.” The bill would establish a “securities transaction tax [that] is applied to stock transactions (1/4 of 1 percent (0.25%)), futures (0.02%), swaps (0.02%), credit default swaps (0.02%), and options (at the rate of the underlying asset).”

I strongly oppose this legislation. Its enactment would lead to serious disruptions in the capital markets while burdening “Main Street” with paying the tax.

The authors of the legislation state that is intended to “make it clear to our constituents that we know Main Street is suffering and a restored Wall Street should now share in its recovery with everyone else.” In spite of exemptions for tax-deferred accounts and other specified trading, the incidence of the tax would ultimately impose a significant and open-ended burden on the individuals and businesses that make up “Main Street.” For example, while an individual trader may not accumulate $100,000 in trades annually, an individual investor in a mutual fund will pay this tax as the fund itself will vastly exceed that amount in trading in a year.

What the creators of this bill need to realize is that Wall Street and Main Street are not separate entities. Wall Street helps to build Main Street by raising the capital businesses need to operate and employ “Main Street. The vast majority of main street investors use managed accounts and mutual funds to invest their savings, the fees paid for such services help sustain Wall Street This tax would be passed through to those investors, the very people that the creators of this bill claim they are trying to protect.

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Comment Letter: Reg SHO Uptick Rule

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22 September 2009

September 21, 2009

Ms. Elizabeth M. Murphy
Secretary
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

RE: Release No. 34-60509; File No. S7-08-09
Proposed Price Test Amendments to Regulation SHO

Dear Ms. Murphy:

The Security Traders Association (STA or the “Association”) welcomes the opportunity to respond to questions posed by the Securities and Exchange Commission (“SEC” or “the Commission”) in SEC File 34-60509, Proposed Amendments to Regulation SHO.

The STA is a professional trade organization that works to improve the markets, ethics, business standards, and working environment for our members. There are approximately 5,200 members across North America, all engaged in the buying selling and trading of securities. The STA provides a forum for our traders, representing institutions, broker-dealers, ECNs, exchanges, market makers and floor brokers to share their unique perspective on issues facing the securities markets. Our members work together to promote investor protection and efficient, liquid markets.

A major fact that many market observers fail to recognize is that the equity markets have functioned efficiently throughout the recent financial meltdown and subsequent recovery. At times the equity markets were the last frontier of liquidity. When investors wanted liquidity they turned to the equity markets which were not frozen, unlike some other markets. When they did, the equity markets were functioning, providing bids and offers to facilitate investor transactions.

The STA has been involved in the discussion and debate about short sales for decades. Our members are actively involved in the business of trading securities and are therefore uniquely qualified to discuss regulations concerning the purchase and sales of securities. We believe that short selling is a legitimate and economically important activity that fosters price discovery and provides additional liquidity to the markets. The STA supports legitimate short selling as a critical component of overall liquidity. We applaud the SEC for focusing on balancing the costs and benefits of any additional short selling restrictions at both the April 8, 2009 open meeting and the May 5, 2009 Roundtable. We are not aware of any evidence produced at these meetings or in all the subsequent comment letters that showed restricting short selling would have eliminated naked or abusive short selling, increased investor confidence in any meaningful fashion or that the benefits of these regulations would outweigh the additional costs they would impose.


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Comment Letter: STA Comments on Rule 204T

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14 August 2009

August 13, 2009

Ms. Elizabeth M. Murphy
Secretary
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
RE: Release No. 34-59748; File No. S7-08-09 and
Release No. 34-60388; File No. S7-30-08

Dear Ms. Murphy:

The Securities and Exchange Commission’s recent actions adopting Rule 204T on a permanent basis is a significant advance in the effort to control abusive short selling. Rule 204T is a measured and targeted regulation that places the regulatory burden primarily upon those market participants that engage in short selling. It is an effective regulation that has significantly reduced the number of issues on the threshold lists and reduced overall fails to deliver by over 50%. This rule works. The deliberative open process used to vet this rule is most effective for considering complex issues. The Security Traders Association congratulates the Commission on this exemplary rulemaking effort.

The Security Traders Association (STA) has been involved in the short sale discussions for decades. We have long viewed short sales as a valid investment alternative and we have held equally strong support for strict enforcement of locate and delivery rules that serve to eliminate illegal naked and abusive short selling. The STA has also long shared its concerns about abusive short selling. We continue to believe that short sale regulations should concentrate on the clearing and settlements processes.

We absolutely concur with Commissioner Paredes’ remarks at the Security Traders Association’s 13th Annual Washington Conference on May 6, 2009:

Much attention has focused on concerns with short selling, but it is equally important to emphasize the benefits of short selling. Short selling makes significant contributions to the effective operation of securities markets, benefiting all market participants and the economy overall. Short selling contributes to liquidity, capital formation, and more efficiently allocated risk. Short selling can buttress buying by allowing investors going long to hedge their positions; and short selling can encourage market participation by leading to improved price discovery. Short selling helps ensure that securities prices are not systematically biased higher than the fundamentals warrant, as could be the case if prices did not reflect the less optimistic views of short sellers. Price discovery matters because investors would be less willing to invest if the contrarian views of short sellers were not fully incorporated into securities prices. Furthermore, when price discovery is compromised, we run the risk that our securities markets allocate capital inefficiently.

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Comment Letter: STA Comments on SEC Reg SHO Rule Filing

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24 June 2009

June 19, 2009

The Honorable Mary L. Schapiro
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
RE: Release No. 34-59748: File No.S7-08-09; Proposed Price Test Amendments to Regulation SHO

Dear Chairman Schapiro:

The Security Traders Association (STA or the “Association”) welcomes the opportunity to answer questions the Securities and Exchange Commission (SEC or the “Commission”) poses regarding SEC File 34-59748, Proposed Amendments to Regulation SHO.

The STA is a professional trade organization that works to improve our markets, ethics, business standards, and the working environment for our members. There are approximately 5,200 members across North America, all engaged in the buying selling and trading of securities. Members participate in STA through 27 affiliate organizations and represent the interests of the trading community and institutional investors. The STA provides a forum for our traders, representing institutions, broker-dealers, ECNs, and floor brokers to share their unique perspective on issues facing the securities markets. Our members work together to promote their shared interests in efficient liquid markets as well as in investor protection.

The STA has been involved in the short sale discussions for decades. Our members are actively involved in the business of trading securities and are therefore uniquely qualified to discuss regulations concerning the purchase and sales of securities. We are in fundamental agreement with the SEC that short selling is a legitimate and economically important activity that fosters price discovery and provides additional liquidity to the markets. The STA supports legal short selling as a critical component of overall liquidity. We applaud the Commissioners for focusing on balancing the costs and benefits of any additional short selling restrictions at both the April 8, 2009 open meeting and the May 5, 2009 Roundtable. We support strict enforcement of locate and delivery rules that eliminate illegal and abusive short selling, including naked shorts.

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Comment Letter: STA Short Sale Circuit Breaker Proposal

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4 May 2009

May 4, 2009

The Honorable Mary L. Schapiro
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
SUBJECT: File Number S7-08-09

Dear Chairman Schapiro:

The Security Traders Association (STA) has been involved in the short sale discussions for decades. We have long respected short sales as a valid investment alternative. We have held equally strong support for strict enforcement of locate and delivery rules that serve to eliminate illegal and abusive short selling, including naked shorts.

The current discussions on how to combat abusive short selling and the attributed volatility have been trading centric (trading triggers result in trading restrictions). We believe that the past 18 months have taught us that we need to think outside the box. The STA has communicated our concerns about “tick tests” and “bid tests” on many occasions in the past. We believe that price tests (such as the “bid test” or “tick test”) have been rendered ineffective by structural changes to the markets and that price tests would be unable to dampen volatility even if they were to be reinstituted. It is the considered position of the Board of Directors of the STA that an objective means of establishing benchmarks for these tests does not exist in today’s market structure. We continue to believe that both tests are seriously flawed and if they were to be implemented gaming of these types of trading restrictions would become rampant again. Neither price test would present any appreciable resistance for abusive short selling in downward spiraling issues and thus would be ineffective in solving the current quandary. The STA believes that rules should be promulgated to control identifiable and measurable problems, and does not believe that reincarnating discredited regulations of yesteryear will position us to effectively compete in today’s markets. In this vein the Security Traders Association has developed an alternative Short Sale Circuit-Breaker Proposal.

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Comment Letter: SEC Proposal on Short Sale Price Test

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18 March 2009

March 18, 2009

The Honorable Mary L. Schapiro
Chairman
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
SUBJECT: SEC Proposal on Short Sale Price Test

Re: SEC Release No 34-58592/Sept. 18, 2008
Emergency Order Pursuant to Section 12(k)(2) of The Securities Exchange Act of 1934 Taking Temporary Action to Respond to Market Developments.

Dear Commissioner Schapiro:

The Security Traders Association (STA) is in fundamental agreement with the Securities and Exchange Commission that short selling is a legitimate and economically important activity that fosters price discovery and provides additional liquidity to the markets. We firmly believe that the Securities Exchange Commission (SEC) bolstered the integrity of the markets when, after extensive study, it removed disparate price tests which provided an opportunity for regulatory arbitrage and had been rendered ineffective by structural changes to the markets. In the best traditions of the SEC, the agency acted in an exemplary manner when it released the Regulation SHO Concept Release and provided industry participants with an opportunity to comment on and help shape the final regulation. The SEC further promoted investor protection by implementing the new regulation as a pilot program giving participants, academia and regulators the opportunity to further study the effects of the rule change and by encouraging additional study of the proposed changes.

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Comment Letter: Letter to Ways and Means Committee Opposing Transaction Tax

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9 March 2009

March 6, 2009

The Honorable Charles Rangel
Chairman
House Committee on Ways and Means
1102 Longworth House Office Building
Washington, DC 20515

Dear Chairman Rangel:

On behalf of the Security Traders Association (STA) and its approximately 5,200 members, I am writing to express our strong opposition to the “Let Wall Street Pay for Wall Street’s Bailout Act of 2009” (H.R. 1068). The proposed legislation would seriously harm the economy as well as individual investors, savers and retirees.

The STA is a worldwide professional trade organization that works to improve the ethics, business standards and working environment for individual members who are engaged in the buying, selling, and trading of securities. Members participate in the STA through 26 affiliate organizations and represent the interests of the trading community and institutional investors. The STA provides a forum for our members and other market participants to share their unique perspectives on issues facing the securities markets. They work together to promote their shared interest in efficient, liquid markets as well as in investor protection.

While H.R. 1068 attempts to target the transaction tax on “Wall Street investors”, it would result in a direct tax increase on individuals planning for retirement, middle class families saving for college through Section 529 programs, state and local government workers invested in public employee retirement systems, and many others. While “wealthy investors” would certainly pay some of the transaction tax, it would also constitute a large and burdensome tax increase on the middle class.

Click here to view this letter in its entirety.
To view the related press release, click here.


Comment Letter: Robust Regulation and Market Quality: The Importance of Due Process in the Course of Self Regulatory Rulemaking

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12 January 2009

January 12, 2009

Via Electronic Mail (rule-comments@sec.gov)

Ms. Florence E. Harmon
Acting Secretary
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
RE: Amendments to Regulation SHO (Interim Final Temporary Rule) SEC Release No 34-58773, File No. S7-30-08

SUBJECT: Robust Regulation and Market Quality: The Importance of Due Process in the Course of Self Regulatory Rulemaking

Dear Ms. Harmon:

Securities and Exchange Commission (SEC) Chairman Christopher Cox’s comments in a recent Washington Post interview provide us with an opportunity to reflect on some of the events of 2008.

The Chairman stated: “‘What we have done in this current turmoil is stay calm, which has been our greatest contribution — not being impulsive, not changing the rules willy-nilly, but going through a very professional and orderly process that takes into account unintended consequences and gives ample notice to market participants,’ Cox said. This caution, he added, ‘has really been a signal achievement for the SEC.’” The STA agrees that such an approach to rulemaking, along with strict enforcement of existing regulations, would have been the most prudent course of action during the very turbulent market conditions in 2008.

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Comment Letter: STA Comments on Short Sales

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24 September 2008

September 24, 2008

The Honorable Christopher Cox
Chairman
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Re: SEC Release No 34-58592/Sept. 18, 2008
Emergency Order Pursuant to Section 12(k)(2) of The Securities Exchange Act of 1934 Taking Temporary Action to Respond to Market Developments.

Dear Chairman Cox:

With the current crisis in the financial markets, and based on our long-standing, productive dialogue with legislators and regulators, the Security Traders Association has been patient with and supportive of the SEC’s actions relative to short sales. However, given continued market stress, it is clear that the continued emphasis on short selling, without rigorous analysis and the opportunity for public comment, is not serving the intended purpose of supporting market integrity.

The securities industry is experiencing burdensome expenses in system adjustments and altered procedures in order to conform with the new orders. At the same time there is confusion as to what is expected, in what timeframe, and by which market participants. At a minimum, greater clarity is required. As a result of current confusion regarding regulatory and operating requirements for affected firms, we are witnessing increased investor and industry confusion and loss of confidence in our markets – the exact opposite of our collective objective.

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Comment Letter: STA Comments on Market Data Fees

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12 September 2008

September 11, 2008

Ms. Florence E. Harmon
Acting Secretary
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Re: File No. SR-NYSEArca-2006.21, SEC Release No 34-57917

Dear Ms. Harmon:

The Security Traders Association (“STA”) has historically had a sustained and productive dialogue with the Commission on behalf of our members, and we are respectfully submitting this letter to offer our perspective on the recent Proposed Order Approving Proposal by NYSE Arca, Inc. To Establish Fees for Certain Market Data (the “Proposed Order”).

The STA recognizes the critical role the Commission plays in protecting the integrity and confidence that investors rightfully place in the U.S. markets. We believe (and have consistently maintained) that an appropriate balance between regulation and competition is critical to the development of market structure. We further agree with the Congressional findings underpinning the national market system provisions in the Securities Exchange Act of 1934, as amended by the Securities Acts Amendments of 1975 (Section 11A(a)(1), 15 U.S.C. § 78k-1 (a)(1)), where “The Congress finds that…(C) It is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure…(ii) fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets…(iii) the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities…..”

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Comment Letter: Chairman Cox Responds to STA Comments on Emergency Order

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6 August 2008

Please find attached the letter from SEC Chairman Christopher Cox which responds to our letter of July 23, 2008 responding to the Emergency Order imposed on short selling at that time.

We continue to carefully monitor the short sale issue and will keep you informed as appropriate.

John Giesea
President & CEO
Security Traders Association

Click here to view Chairman Cox’s response.


Comment Letter: STA Comments on Emergency Action by SEC

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23 July 2008

July 23, 2008

The Honorable Christopher Cox
Chairman
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Re: SEC Release No 58166/July 15, 2008

Emergency Order Pursuant to Section 12(k)(2) of The Securities Exchange Act of 1934 Taking Temporary Action to Respond to Market Developments.

Dear Chairman Cox:

The Security Traders Association1 (STA) has historically engaged in productive dialogue with the Commission on behalf of our members, and we are respectfully submitting this letter to offer our perspective on the recent Emergency Order regarding short selling in the securities of certain financial institutions.

The STA recognizes the critical role the Commission plays in protecting the integrity and confidence that investors rightfully place in the U.S. markets. We believe (and have consistently maintained) that an appropriate balance between regulation and competition is critical to the development of market structure. Further, we acknowledge the Commission’s right to intervene in extraordinary market circumstances. We recognize that the current conditions are unique.

We believe that the Emergency Order of July 15, 2008 should terminate after the July 29th extension expires. Should the Commission determine that any further action, either via emergency powers or rule promulgation, is warranted, it should not be implemented without a detailed analysis of the impact on market participants. Such an analysis should focus in particular on the effect on liquidity providers and widely used clearing systems. Further, we urge that any proposed extension of the Order be issued first for public comment.

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Comment Letter: STA Supports Enhanced Reg SHO Rule Proposal--S7-08-08

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22 May 2008

Dear Ms. Morris:

The Security Trader’s Association (the “STA” or the “Association”) welcomes this opportunity to comment on the proposal of the Securities and Exchange Commission (the “SEC” or the “Commission”) to promulgate Rule 10b-21, a new anti-fraud rule under the Securities Exchange Act of 1934 (the “Exchange Act”). Specifically, new Rule 10b-21 would address fails-to-deliver securities that are associated with naked short selling.1 With the new rule, the Commission intends to highlight the liability of persons that deceive specified persons about their intention or ability to deliver securities in time for settlement, including persons that deceive their broker-dealer about their locate, source, or ownership of shares and that fail to deliver securities by settlement date. The Commission is concerned that fails-to-deliver associated with naked short selling may have a negative effect on the market and shareholders, and thus seeks to add proposed Rule 10b-21 to its arsenal of tools to combat manipulative short selling.

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Comment Letter: STA Comments on Private Issuers Filing--S7-04-08

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22 May 2008

Dear Ms. Morris:

The Security Traders Association (“STA”) welcomes the opportunity to comment on rule proposal S7-04-08 by the Securities and Exchange Commission (the “Commission’) to amend the Rule that exempts a foreign private issuer from having to register a class of equity securities under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) based on the submission to the Commission of certain information published outside the United States.

In two recent letters the STA has commented to the Commission of proposed changes2 in the OTC markets as they affect investors, traders, and securities. In each of these cases, the STA recognized and supported the benefits of more efficient and transparent trading of non-U.S. securities.

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Comment Letter: STA Special Report -- U.S. Market Structure--2008

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30 April 2008


Comment Letter: STA Urges Real-Time Trade Reporting in OTC ADR's

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16 August 2007

Dear Ms. Morris:

The Security Traders Association (“STA”) appreciates the opportunity to comment on rule proposal SR-NASD-2007-039 filed by the National Association of Securities Dealers, Inc. (“NASD”), currently known, and hereinafter referred to, as the Financial Industry Regulatory Authority, Inc. (“FINRA”). In Release 34-56103, FINRA proposes to delay implementation of certain rule changes approved in SR-NASD-2005-146 until after November 26, 2007. Specifically, FINRA is proposing to delay the approved rule changes that relate solely to the expansion of the scope of NASD IM-2110-2 to OTC Equity Securities and the related deletion of NASD Rule 6541.

The STA supports the proposed expansion of the Manning interpretation to OTC Equity Securities, and agrees with FINRA that the implementation date should be delayed in order to allow firms to make necessary systems changes to ensure the continuation of a fair, liquid, and orderly market.

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Comment Letter: STA Comments on SR-NASD-2007-029--OTCBB Access Fees

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4 June 2007

Dear Ms. Morris:

The Security Trader’s Association (“STA”) welcomes the opportunity to comment on the National Association of Securities Dealers, Inc.‘s (“NASD”) proposal to amend NASD Rule 6540© to exclude from the access fee display requirements access fees below a specified level. Specifically, the NASD proposes to allow a participating ATS or ECN to not display its access fee in its published quotation on the OTC Bulletin Board (“OTCBB”) if the fee is $0.003 per share or less for a published quotations that is $1.00 or greater and less than 0.3% of the published quotation on a per share basis if the published quotation is less than $1.00. For the reasons discussed below, we respectfully oppose the proposal and request that the Commission reject it.

The STA is a worldwide professional trade organization that works to improve the ethics, business standards and working environment for our members. There are approximately 5,200 members, all engaged in the buying, selling, and trading of securities. Members participate in STA through 27 national and international affiliate organizations and represent the interests of the trading community and institutional investors. The STA provides a forum for our traders, representing institutions, broker-dealers, ECNs, and floor brokers to share their unique perspectives on issues facing the securities markets. They work together to promote their shared interest in efficient, liquid markets as well as in investor protection.

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Comment Letter: STA Comments on Ammendments to Reg SHO and Rule 10a-1

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12 February 2007

Dear Ms. Morris:

The Security Traders Association (“STA”) welcomes the opportunity to comment on the Commission’s proposal to remove the tick test of Rule 10a-1, add Rule 201 of Regulation SHO to provide that no price test, including and price test of any SRO, shall apply to short sales in any security, prohibit any SRO from having a price test, and amend Rule 200(g) of Regulation SHO to remove the requirement that a broker-dealer mark a sell order of an equity security as “short exempt” in the seller is relying on an exception from the price test of Rule 10a-1, or any price test of any exchange or national securities association.


Comment Letter: STA Comments on Three Quote Rule

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21 November 2006

Dear Ms. Morris:

The Security Trader’s Association (“STA”) welcomes the opportunity to comment on the proposed amendments to NASD Rules 2320(g) and 3110(b) to exclude from the “Three Quote Rule’s” coverage transactions in foreign securities of a foreign issuer that are part of the FTSE All-World Index. We support the NASD’s efforts to improve the ability of broker-dealers to provide timely and best execution to their customers’ orders; however, we express our concerns and endorse the comments submitted by Canaccord Capital Corporation (“Canaccord Letter”). NASD’s stated intention to withdraw all existing exemptions it has granted to the “Three Quote Rule” that relate to foreign securities without any explanation, empirical data, analysis or study of the consequences of that action, will have the opposite effect.


Comment Letter: STA White Paper: Fulfilling the Promise of the National Market System--STA's Perspective on U.S. Market Structure

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1 August 2003

August 1, 2003

To Those Interested in U.S. Market Structure Issues:

In 1975, the Congress mandated that the Securities and Exchange Commission (“SEC” or “Commission”) facilitate the development of a National Market System (“NMS”). Its goal was to assure that securities markets in the United States remain the most efficient and liquid in the world. It was expected that the NMS would foster best execution of customer orders and that broker-dealers would place the interests of their customers first. The Security Traders Association (“STA”) shares the goal of achieving the objectives of the NMS and maintaining efficient and liquid U.S. markets. Fulfilling the promise of the NMS will serve to make the securities markets more efficient and the capital formation process more robust, and in turn benefit the nation’s economy and investors in this critical time to the United States.

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