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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