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.

Click here to view this letter in its entirety, along with an excerpt from the STA Special Report.