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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