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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