Self-Regulatory Organizations; Order Approving Proposed Rule Change and Amendment Nos. 1 and 2 Thereto by the National Association of Securities Dealers, Inc. Relating to Display Requirements When Using Reserve Size in the Nasdaq National Market Execution System

I. Introduction

On October 4, 2001, the National Association of Securities Dealers, Inc. (“NASD” or “Association”), through its subsidiary The Nasdaq Stock Market, Inc. (“Nasdaq”), submitted to the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), and Rule 19b-4 thereunder, a proposed rule change relating to display requirements when using reserve size in the Nasdaq National Market Execution System (“NNMS” or “SuperSOES”). On October 23, 2001 and October 29, 2001, NASD submitted Amendment Nos. 1 and 2 to the proposed rule change, respectively. The proposed rule change, as amended, was published for comment in the Federal Register on November 13, 2001. The Commission received 233 comment letters on the proposed rule change.

In addition, Nasdaq submitted two letters in response to comments. This order approves the proposed rule change, as amended.

II. Description of Proposal

Under the NNMS, market makers are allowed to keep shares in reserve. Known as reserve size, shares kept in reserve are available for execution through SuperSOES, but are not shown to the marketplace. Currently, the SuperSOES rules prohibit the use of the system's reserve size functionality unless a market maker is displaying at least 1000 shares in its public quote. Nasdaq proposes to eliminate the 1000-share display requirement for using reserve size. Under the proposed rule change, market makers would be allowed to use NNMS” reserve size any time they displayed a quote of at least one round lot (100 shares). Nasdaq would continue its policy of allowing the use of reserve size even if a particular displayed quotation dropped below 100 shares based on partial, interim executions against that un-updated quote.

III. Summary of Comments

As noted above, the Commission received 233 comment letters regarding the proposed rule change. A large majority of the letters were submitted by registered representatives, but commenters also included broker-dealer and market making firms, private investors, and a professional association. Five commenters supported the proposal, while the remaining 228 commenters opposed the proposal.

IV. Discussion

After carefully considering all the comments, the Commission finds, for the reasons discussed below, that the proposed rule change is consistent with the Act and the rules and regulations applicable to the NASD. In particular, the Commission finds that the proposal is consistent with the requirements of Sections 15A(b)(6) of the Act.

1. Transparency Issues

Four commenters who supported the proposed rule change noted that the purpose of the reserve size feature is to provide market makers with a tool to limit the negative market impact associated with public knowledge of large pending transactions. They further noted that electronic communication networks (“ECNs”) offer reserve size functionality but are not subject to the 1000-share minimum display requirement that currently applies on Nasdaq. In the words of one commenter, the current 1000-share minimum display requirement on Nasdaq “serves as an alert to other market participants to the existence of reserve size in the system,” and thus “defeats the purpose of the reserve size functionality.” By contrast, this commenter contended, market participants cannot easily infer the existence of reserve size from ECN quotations.

One commenter added that market makers should be free to enter any displayed or reserve size that suits their trading intentions, and forcing them to display such a large minimum size is unfair. This commenter noted that while proponents of the 1,000 share minimum display size for reserve orders claim that it forces market makers to display larger size to the marketplace, the opposite is true. The commenter noted that this argument assumes that if you restrict a market maker from entering his full intent with a 100 share displayed size, then he will enter it with a 1,000 share displayed size instead. The commenter believed that this assumption ignores several more attractive options available to a market maker in this situation, such as: “(1) Withhold[ing] his intention to trade from the marketplace entirely and wait[ing] until the order becomes marketable to execute it, (2) forgo[ing] the Nasdaq reserve feature and enter[ing] only the number of shares he wishes to display into the marketplace and then manually 'refresh[ing]' his quote each time the displayed portion is executed, or (3) enter[ing] his order into an approved display alternative ATS that is not subject to the 1,000 share restriction.” According to the commenter, each of these alternatives legally defeats any purported benefits of the 1,000 share minimum rule, because each one also has a negative impact on market quality when compared to permitting the market maker use his reserve quote directly.

Other commenters argued that the ability of a market maker to conceal a large reserve size while displaying only 100 shares runs counter to the goal of market transparency and would controvert price discovery. Specifically, several commenters expressed concern that investors would be unable to properly assess risk and reward, gauge the market's direction, and make informed decisions about how to invest with the reduced display size. At the same time, some added, the market maker will have the advantage of knowing the size of incoming orders.

In response, Nasdaq offered several arguments in support of its view that, contrary to commenters' concerns, the proposal will not materially impact transparency in its market. First, Nasdaq challenged the premise that the 1000-share minimum display requirement is a key component in encouraging the display of significant trading interest. A recent review of SuperSOES indicated that only 13.9 percent of market maker quotes large enough to use reserve size actually had a reserve share amount attached to them.

Second, Nasdaq argued that transparency has more than one component, such as trade price and volume information. Nasdaq asserted that the speed and reliability of such information has dramatically improved, with SuperSOES providing instantaneous automatic executions and immediate dissemination of the resulting transaction information via the public tape.

Finally, Nasdaq argued that, because all displayed size at a given price level has priority in execution over reserve size at the same price, market participants desiring to trade immediately and in size have incentives to quickly display larger share amounts. In this context, Nasdaq cited statistics to show that the average display size of quotes today has increased 83 percent from the average display size immediately following decimalization and before SuperSOES was introduced. Nasdaq believes that these statistics show that market participants are more inclined to display larger size in the fast-moving SuperSOES environment.

The Commission believes that Nasdaq has adequately addressed the concerns raised by commenters. While the Commission recognizes that the proposed rule change appears to limit transparency by reducing the minimum number of shares that must be displayed before a market maker can use reserve size, the Commission agrees with the opinion of one commenter that market makers will not necessarily display 1000 shares just to use the reserve size feature in SuperSOES, in lieu of other options such as sending an order to an ECN. Even aside from the minimum display requirement, the Commission believes that market participants will still have an incentive to display greater size, because SuperSOES executes incoming orders against displayed size at the best price before accessing reserve size at the same price level. Therefore, it may be in a market participant's best interest to display greater size and receive an immediate execution. The Commission notes that Nasdaq has offered data that indicates that only a small portion of quotes large enough to potentially use reserve size, actually have a reserve share amount attached to them.

2. Liquidity Issues

One commenter who supported the proposed rule change believed that the current, 1000-share minimum display requirement inhibits liquidity. Rather than meet that requirement, this commenter argued, a market maker may choose to withhold his intention to trade from the marketplace entirely and wait until an order he is holding becomes marketable to execute it.

On the other hand, many commenters objected to the proposal on the grounds that it would negatively impact market liquidity. Some of these commenters expressed the view that the ability to display only 100 shares would allow market makers to limit the availability of stock at the inside market, and provide little liquidity during a severe upturn or downturn. These commenters appeared to believe that, under the proposal, when a market maker at the inside price is displaying only 100 shares while maintaining a large reserve size at that same price, the system would fill incoming orders at a rate of only 100 shares at a time. During the time lag that would result, the market maker would have time to withdraw most of the liquidity stored in his reserve size if this would be to his advantage, as it might be in volatile markets.

One commenter observed that in approving the original SuperSOES system and its reserve size feature, the Commission cited the justification set forth by Nasdaq that the 1000-share display requirement would increase liquidity by providing an incentive for market makers to display a larger quotation size. “We are confounded,” this commenter stated, “that the NASD would reverse its previous position and propose to pare back the reserve size requirement to a single round lot,” particularly in view of “the substantial deterioration of displayed market liquidity in the post-decimals environment.”

In response to liquidity concerns, Nasdaq insisted that nothing in the reduction of the display size requirement could be expected to remove liquidity from its market. According to Nasdaq, even though a market participant may elect to apportion their total trading interest between displayed size and reserve size differently, the same number of shares remain immediately accessible through the system. In addition, Nasdaq believes that to the extent the proposal limits the negative impact associated with the required display of large share size, the total amount of shares entered into SuperSOES may increase and thereby increase overall liquidity on Nasdaq.

The Commission understands the concerns raised by commenters. However, the Commission believes that the ability to use reserve size under the proposal may give market participants on Nasdaq greater flexibility in representing large orders. In particular, the proposed rule change may prove useful to market participants who wish to minimize the market impact of their orders. Increased participation should, in turn, enhance liquidity of the market, to the benefit of all market participants. In addition, the Commission notes that a reduction in the displayed amount of liquidity does not necessarily signify a reduction in the amount of actual liquidity accessible in a market. As clarified by Nasdaq, the same amount of shares will be immediately accessible through the system.

3. Impact on Executions and Potential for Abuse

Many commenters believed that orders sent to Nasdaq that today can be filled in one execution would require multiple executions to be filled under the proposed system, and that the resulting time lag would slow down the entire market, unfairly advantage market makers, and lend to widespread abuse. Various commenters believed that the proposal would promote deception, foster manipulative conduct, facilitate monopoly pricing and collusion, and result in inefficiency.

By way of example, many commenters noted that under the current system, when a market maker displays 1000 shares at the inside market—as required for use of the reserve size feature—an incoming order of up to 1000 shares is filled immediately against that displayed quotation, in one execution. Under the proposal, these commenters believe, because the same market maker would be required to display only 100 shares and could hold the remaining 900 shares in reserve size, each time 100 shares of an incoming order is filled, the system would need to refresh the displayed size again before the next 100 shares could be filled, causing the execution of a full 1000 shares to take ten times as long.

Many commenters contended that the reduced display requirement would benefit market makers at the expense of investors, allowing them, for example, to slow down the movement of a stock while minimizing their own exposure. In the view of these commenters, under the proposal, a market maker could display the minimum 100 shares at the inside market while entering a large number of shares in reserve size at the same price. If he then saw the market shift direction, he could withdraw the liquidity in his reserve size and move it to a higher price level before investors could reach it, because the multiple executions of incoming orders at the inside price at a rate of only 100 shares at a time would give him the time to do so. In the words of many commenters, the proposal would thus effectively “eliminate liability orders.”

Commenters also variously argued that market makers would artificially stall the momentum of a stock so they could “back away” from liability for their reserve size; misrepresent true supply and demand; and interfere with the natural direction of the market. Among the other abuses commenters feared were: a market maker holding up the price of a downward moving stock in order to short-sell ahead of the market; a market maker holding down the price of an upward moving stock in order to buy more at a lower price; and a market maker slowing the upward movement of a stock to prevent call options from being exercised against him.

Nasdaq believes that the above concerns may flow from a “fundamental misapprehension about how SuperSOES works.” According to Nasdaq, although shares held in the reserve size feature are not displayed, these shares remain immediately and continuously available for execution through the system.

As described by Nasdaq, SuperSOES matches incoming orders with quotes based on price and size information resident in the system, and automatically executes against all shares of automatic-execution participants—whether displayed or in reserve—instantaneously. According to Nasdaq, “at no point during this execution process are automatic-execution market participants given an opportunity to decline to trade, or sent orders that require their assent to consummate a transaction.” In addition, according to Nasdaq, “SuperSOES is already a powerful salve for exactly those maladies that the commenters assert will befall the Nasdaq market if the 1,000-share display requirement is removed.” For example, Nasdaq stated that the SuperSOES requirement that automatic execution market participants be firm for the amounts and prices of the trading interest they place into the system reduces the potential for, and increases the costs of, attempts to manipulate the market. Likewise, the swift and sure execution of orders by SuperSOES based on price-time priority greatly increases the confidence of investors that they are being treated fairly.

The Commission agrees that a great many of the commenters appear to have misunderstood the way the reserve size feature operates and the nature of the proposed rule change. This misunderstanding appears to be the basis of many of the opposing comments. The Commission notes that when an order is sent to Nasdaq for automatic execution through SuperSOES, the system immediately accesses all liquidity at the best price residing within the system to fill that order, whether that liquidity is displayed or held in reserve size. As Nasdaq has represented in its responses to commenters' objections, the automatic execution against all such resident size takes place instantaneously. When an order cannot be filled by the market maker's displayed size alone (or by the aggregate displayed size of all market makers at the same best price, if there is more than one market maker at that price), the system immediately accesses the reserve size behind it (and behind the displayed size of all market makers at that price, in time priority), and trades against it all in a single execution for each market maker.

4. Competitive Issues

Four commenters maintained, in support of the proposal, that it would promote fair competition across the markets. As explained by one commenter, for example, it would level the playing field between Nasdaq participants and members of UTP exchanges, and between Nasdaq and its primary competitors, ECNs and the regional exchanges. Specifically, two commenters argued that Nasdaq is the only market center that imposes a 1000-share display requirement, and is thus competitively disadvantaged. Another commenter noted that it is “fundamentally unfair to force a market participant to depend on a potential competitor [if a market maker enters an order into an ATS] due to an artificial regulatory disparity between the two participants.”

Other commenters argued that the function of an ECN is different than that of market makers on Nasdaq, in that an ECN's purpose is to display and execute orders and not to make markets. Some commenters added that an ECN is not afforded the same advantages as market makers (e.g., the ability to make a profit on the market spread), and thus should not be subject to the same minimum display requirements.

One commenter cited a recent Nasdaq study indicating that in the post-decimalization environment, the average quote size posted by an ECN was 1190 shares, challenging with this data Nasdaq's argument that it needs to reduce Nasdaq's display-size requirement to 100 shares in order to compete. This commenter believed that the proposed rule change would provide a “rather marginal competitive benefit” to Nasdaq at a “high cost to market liquidity and transparency.” The same commenter further argued that Nasdaq, as a subsidiary of a national securities association, is bound by the Act to maintain rules that “remove impediments to and perfect the mechanism of a free and open market,” which, the commenter stated, is a higher standard than that imposed by the regulatory framework governing ECNs.

In response, Nasdaq noted that Archipelago Exchange, an equity trading facility of the Pacific Exchange, offers reserve size functionality with no apparent minimum display requirement, as do ECNs that provide alternative venues to trade Nasdaq securities. In addition, Nasdaq asserted that, in fact, no other market center providing reserve size imposes a requirement to display a 1000 share quote for the privilege.

Nasdaq also challenged the relevance of data showing that the average display size on ECNs is 1,190 shares as undermining Nasdaq's contention that it needs to reduce its own minimum display size to 100 shares in order to compete. According to Nasdaq, in many cases ECNs aggregate orders from multiple subscribers, while market makers may or may not aggregate trading interest. Further, an average quote on a system that places no restriction on the use of reserve size is different, Nasdaq maintained, than a system that has a minimum display requirement inhibiting the use of its reserve size feature. Moreover, Nasdaq argued, an average size of 1,190 indicates that in many cases ECNs in fact display quotes of less than 1000 shares, with reserve size functionality, while Nasdaq market makers cannot provide their customers with the same. To further bolster its argument that it needs to reduce the display minimum in order to compete, Nasdaq cited a recent review it conducted of reserve size usage by ECNs, which found that almost 40 percent of ECN quotes accessed by SelectNet had a reserve size behind them, and that of those 40 percent, 75 percent were displaying less than 1000 shares.

As noted above, the Commission has previously approved rules of an exchange (specifically, the Archipelago Exchange) that provide for a reserve size functionality with no minimum-size display requirement, reflecting the Commission's belief that such rules are not inconsistent with the Act. Moreover, the Commission believes that the proposed rule change may afford participants on Nasdaq greater flexibility in handling large orders in a manner enabling them to compete with participants in other market centers. The Commission is not aware of any issues regarding the use of reserve size with no display requirement on the Archipelago Exchange, and believes, further, that Nasdaq has adequately addressed the other major issues raised by commenters concerning transparency, liquidity, and impact on executions and potential for abuse in its own proposed system. Thus, to deny Nasdaq the ability to reduce its display size requirement, in the Commission's view, would inhibit fair competition among markets.

5. Timing of the Proposed Rule Change

A large number of commenters argued that it was too soon after the implementation of SuperSOES to introduce the proposed changes, and that more time was necessary to collect meaningful data and evaluate the current system before modifying it in this significant way. Some commenters believed that the two months of trading on the SuperSOES System before the proposal was first filed were a slow trading period and unrepresentative of typical market conditions. Many commenters also noted that the proposal was published relatively soon after the impact of the September 11, 2001 terrorist attacks on America, and wrote that it was difficult to meaningfully consider the potential effect of the proposed changes during a period in which the markets and market participants were still recovering from that episode.

Nasdaq contended that, in view of the competitive process, it must be free to quickly respond to the marketplace, and rejected the notion that its ability to alter and improve its systems is limited by how short a period of time had elapsed since a system was last changed.

The Commission believes that in view of the further passage of time since the proposed rule change was filed, these timing issues are no longer sufficient a concern to warrant a delay in the Nasdaq's ability to adopt the proposed rule change. The Commission expects NASD Regulation and Nasdaq to monitor trading to ensure the proper use of the reserve size feature and reevaluate the minimum display requirement if there is an overall decline in the quality of the market.

IV. Conclusion

It is therefore ordered, pursuant to section 19(b)(2) of the Act, that the proposed rule change (SR-NASD-2001-66) be, and hereby is, approved.

Appendix

1. Letter from Robert A. Gaida Jr., Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Gaida Letter”).

2. Letter from Edward J. Keane Jr., Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Keane Letter”).

3. Letter from David Schwartz, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Schwartz Letter”).

4. Letter from Keith A. Donitz, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Donitz Letter”).

5. Letter from Frantisek Kovac, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Kovac Letter”).

6. Letter from Brian J. Dershow, Equities Trader, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Dershow Letter”).

7. Letter from Kathleen Murphy, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Murphy Letter”).

8. Letter from Matthew C. Rea, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Rea Letter”).

9. Letter from David B. Feinstein, Principal, Dodo Ventures, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Feinstein Letter”).

10. Letter from Eugene C. Giaquinto, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Giaquinto Letter”).

11. Letter from Joseph J. Gormley III, Small Investor, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Gormley Letter”).

12. Letter from R. Travis Williamson, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Williamson Letter”).

13. Letter from David Lui, Jr., Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Lui Letter”).

14. Letter from Seth Helfman, to Jonathan G. Katz, Secretary, SEC, dated October 19, 2001 (“Helfman Letter”).

15. Letter from David M. Kushner, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 13, 2001 (“Kushner Letter”).

16. Letter from Edward Miller, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Miller Letter”).

17. Letter from Jonathan R. Goldstein, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“J. Goldstein Letter”).

18. Letter from Harlan R. Schreiber, Esquire, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Schrieber Letter”).

19. Letter from Eric A. Shapiro, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“E. Shapiro Letter”).

20. Letter from Sean Ward, to Jonathan G. Katz, Secretary, SEC, dated October 19, 2001 (“Ward Letter”).

21. Letter from Stephen M. Hughes, to Jonathan G. Katz, Secretary, SEC, dated October 20, 2001 (“S. Hughes Letter”).

22. Letter from John R. Hughes III, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“J. Hughes Letter”).

23. Letter from Erika Roth-McEnroe, to Jonathan G. Katz, Secretary, SEC, undated, received November 20, 2001 (“Roth-McEnroe Letter”).

24. Letter from Matthew Bouldin, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Bouldin Letter”).

25. Letter from Joseph Dondero, Individual Investor, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Dondero Letter”).

26. Letter from Ronen T. Zour, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Zour Letter”).

27. Letter from Michael Parsons, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received November 20, 2001 (“Parsons Letter”).

28. Letter from Bryan M. Donnelly, to Jonathan G. Katz, Secretary, SEC, undated, received November 20, 2001 (“B. Donnelly Letter”).

29. Letter from Jeffrey S. Schultz, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC., undated, received November 20, 2001 (“Schultz Letter”).

30. Letter from John Chinnock, Securities Principal, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, undated, received November 20, 2001 (“Chinnock Letter”).

31. Letter from Joel Brandon Jones, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“J. Jones Letter”).

32. Letter from Richard Lutz, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received November 20, 2001 (“Lutz Letter”).

33. Letter from Corey N. Shapiro, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“C. Shapiro Letter”).

34. Letter from Justin Namolik, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Namolik Letter”).

35. Letter from Ryan E. Poulton, Registered Representative, NASD, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Poulton Letter”).

36. Letter from Mathew LaBonar, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“LaBonar Letter”).

37. Letter from David Kinzelberg, Equity Trader, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Kinzelberg Letter”).

38. Letter from Blair Ettles, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Ettles Letter”).

39. Letter from Daniel Balber, NASD Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Balber Letter”).

40. Letter from Feral Talib, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated November 15, 2001 (“Talib Letter”).

41. Letter from Andrew Donnelly, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 13, 2001 (“A. Donnelly Letter”).

42. Letter from Eric Klein, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“E. Klein Letter”).

43. Letter from Carl Z. Giannone, Registered Representative, Limited Representative Equity Trader, General Securities Principal, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Giannone Letter”).

44. Letter from Choi Kilyoung, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Kilyoung Letter”).

45. Letter from Matthew Nemcic, to Jonathan G. Katz, Secretary, SEC, dated October 13, 2001 (“Nemcic Letter”).

46. Letter from Kevin McCabe, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“McCabe Letter”).

47. Letter from Elizabeth Goldstein, Registered Representative, MS, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“E. Goldstein Letter”).

48. Letter from Benjamin Lee, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“B. Lee Letter”).

49. Letter from John J. Morgan, Series 7 Trader, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“J. Morgan Letter”).

50. Letter from Daniel M. Stuzin, Esquire, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Stuzin Letter”).

51. Letter from Justin M. Gosling, Equities Trader, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Gosling Letter”).

52. Letter from Peter Ciemins, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Ciemins Letter”).

53. Letter from Markham E. Murphy, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, undated, received November 30, 2001 (“M. Murphy Letter”).

54. Letter from Favian A. Roldan, Registered Broker, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Roldan Letter”).

55. Letter from Jason A. Strum Registered Representative, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 13, 2001 (“Strum Letter”).

56. Letter from George F. Hassell, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Hassell Letter”).

57. Letter from David Lazarus, Registered Nasdaq Principal, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Lazarus Letter”).

58. Letter from Ziad El-Assad, Registered NASD Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“El-Assad Letter”).

59. Letter from Kevin Diemar, Registered Nasdaq Principal, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Diemar Letter”).

60. Letter from Michael Washburn, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, undated, received October 17, 2001 (“Washburn Letter”).

61. Letter from Adam S. Chesler, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Chesler Letter”).

62. Letter from Christian Daulong, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Daulong Letter”).

63. Letter from Shari M. Sherwood, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“S. Sherwood Letter”).

64. Letter from John D. Lovett, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Lovett Letter”).

65. Letter from Stephen Edmonds, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Edmonds Letter”).

66. Letter from Jay Bailyn, Registered Representative, Heartland Securities, LLC, NASD Member, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Bailyn Letter”).

67. Letter from Michael D. Linton, Registered Representative, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“Linton Letter”).

68. Letter from Michael Sherwood, Registered Principal, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“M. Sherwood Letter”).

69. Letter from Christopher A. Hite, Registered NASD Principal, Heartland Securities, Inc., to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Hite Letter”).

70. Letter from Grier Laughlin, Registered Nasdaq Principal, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Laughlin Letter”).

71. Letter from Christopher Brook, Registered Principal, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Brook Letter”).

72. Letter from Damian Falcone, Registered Representative, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, undated, received October 18, 2001 (“Falcone Letter”).

73. Letter from Scott Sullivan, Registered Representative, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Scott Sullivan Letter”).

74. Letter from Sal Chaudhry, Registered Principal, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Chaudhry Letter”).

75. Letter from William Nathan Shorack, Registered Principal, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Shorack Letter”).

76. Letter from Richard T. Hayden, Registered Representative, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Hayden Letter”).

77. Letter from Glen Dubin, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Dubin Letter”).

78. Letter from Edward E. Hong, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Hong Letter”).

79. Letter from Tal Sharon, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Sharon Letter”).

80. Letter from Christopher Greeley, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Greeley Letter”).

81. Letter from Jeremy Zucker, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Zucker Letter”).

82. Letter from Joel Arberman, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated November 19, 2001 (“Arberman Letter”).

83. Letter from Joon Hwan Choi, Securities Trader, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“J. Choi Letter”).

84. Letter from Boris M. Piskun, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Piskun Letter”).

85. Letter from Marc R Grossman, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Grossman Letter”).

86. Letter from Edward T. Flaherty Jr., to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“Flaherty Letter”).

87. Letter from Richard Lay, Professional Trader, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Lay Letter”).

88. Letter from Coreina Chan, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Coreina Letter”).

89. Letter from Zachary Hepner, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Hepner Letter”).

90. Letter from Douglas Song, Professional Trader, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“D. Song Letter”).

91. Letter from Michael O'Malley, Professional Trader, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“O'Malley Letter”).

92. Letter from Karl Sohn, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“Sohn Letter”).

93. Letter from Greg T. Bauer, to Jonathan G. Katz, SEC, dated October 15, 2001 (“Bauer Letter”).

94. Letter from Evan Stashefsky, Equities Trader, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Stashefsky Letter”).

95. Letter from Keith Corl, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Corl Letter”).

96. Letter from Alexander F. Zemek, to Jonathan G. Katz, Secretary, SEC, dated October 13, 2001 (“Zemek Letter”).

97. Letter from Michael C. Malizia, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Malizia Letter”).

98. Letter from Jeffrey Kirstein, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Kirstein Letter”).

99. Letter from Keith Kirstein, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“K. Kirstein Letter”).

100. Letter from Brian Ingram, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Ingram Letter”).

101. Letter from Andrew Rotter, to Jonathan G. Katz, Secretary, SEC, undated, received November 20, 2001 (“Rotter Letter”).

102. Letter from Ira Landsman, CPA, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Landsman Letter”).

103. Letter from Jimmie E. Williams, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“J. Williams Letter”).

104. Letter from Adam B. Salti, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Salti Letter”).

105. Letter from Rami Abelson, Trader, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Abelson Letter”).

106. Letter from Andrew C. Sohn, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Sohn Letter”).

107. Letter from Brandford Hotchkiss, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Brandford Letter”).

108. Letter from Jefferson Magat, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 13, 2001 (“Magat Letter”).

109. Letter from Howard Teitelman, Registered Principal, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Teitelman Letter”).

110. Letter from Lee Waxman, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, undated, received November 20, 2001 (“Waxman Letter”).

111. Letter from Lee M. Weckherlen, Registered Representative, to Jonathan G. Katz, Secretary, SEC, Dated October 15, 2001 (“Weckherlen Letter”).

112. Letter from Eric Orgen, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Orgen Letter”).

113. Letter from Kevin Jahng, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Jahng Letter”).

114. Letter from Brian M. Crowell, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Crowell Letter”).

115. Letter from Marc Miller, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“M. Miller Letter”).

116. Letter from Jeremy Ives, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Ives Letter”).

117. Letter from Tyler Isaacson, Registered Principal, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, undated, received November 30, 2001 (“Isaacson Letter”).

118. Letter from Timothy J. Wilson, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Wilson Letter”).

119. Letter from Richard P. Getz, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Getz Letter”).

120. Letter from Frank J. Kropf, Day Trader, Self-Employed, to Jonathan G. Katz, Secretary, SEC, dated October 13, 2001 (“Kropf Letter”).

121. Letter from Kristin Hinkel, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Hinkel Letter”).

122. Letter from Neal King, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“King Letter”).

123. Letter from Do Hoon Kim, to Jonathan G. Katz, Secretary, SEC, dated November 30, 2001 (“D. Kim Letter”).

124. Letter from Daniel J. Cosenza, Registered principal, to Jonathan G. Katz, Secretary, SEC, dated November 30, 2001 (“Cosenza Letter”).

125. Letter from Diane P. Murphy, Managing Director, Robertson Stephens, Inc., to Jonathan G. Katz, Secretary, SEC, dated December 3, 2001 (“Robertson Stephens Letter”).

126. Letter from Hedi H. Reynolds, Managing Director, Nasdaq Trading, Morgan Keegan & Company, Inc., to Jonathan G. Katz, Secretary, SEC, dated December 3, 2001 (“Morgan Keegan Letter”).

127. Letter from Richard Cammarata, General Securities Prinicpal, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Cammarata Letter”).

128. Letter from Thomas Ingles, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Ingles Letter”).

129. Letter from Charles R. Nierling, Registered Options Principal, to Jonathan G. Katz, Secretary, SEC, dated December 4, 2001 (“Nierling Letter”).

130. Letter from Bill J. Deligiannis, Andover Trading, dated October 31, 2001.

131. Letter from Hummayun Majid, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Majid Letter”).

132. Letter from Lee Lazar, Equity Trader, Chimera Capital, to Jonathan G. Katz, Secretary, SEC, dated October 24, 2001 (“Lazar Letter”).

133. Letter from Samuel S. Mikhelson, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Mikhelson Letter”).

134. Letter from Tal Plotkin, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Plotkin Letter”).

135. Letter from Thomas A. Stengel, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 24, 2001 (“Stengel Letter”).

136. Letter from Jay Crosby, Registered Representative, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Crosby Letter”).

137. Letter from Raymond J. Murphy, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“R. Murphy Letter”).

138. Letter from Anthony J. Masso, Professional Trader, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Masso Letter”).

139. Letter from Joshua Levine, to Jonathan G. Katz, Secretary, SEC, dated December 6, 2001 (“Levine Letter”).

140. Letter from Ronn Diamond, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated received December 13, 2001 (“Diamond Letter”).

141. Letter from Matthew R. Keegan, Registered Principal, Heartland Securities Corporation, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Keegan Letter”).

142. Letter from Mehmed Markasevic, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received December 18, 2001 (“Markasevic Letter”).

143. Letter from Scott Sukenick, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received December 26, 2001 (“Sukenick Letter”).

144. Letter from Chris Paper, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Paper Letter”).

145. Letter from Todd Skinner, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Skinner Letter”).

146. Letter from Samson Leung, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Leung Letter”).

147. Letter from Robert B. Smith, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“R. Smith Letter”).

148. Letter from Shuming Yang, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Shuming Letter”).

149. Letter from Angelo C. Nicoletta, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Nicoletta Letter”).

150. Letter from Timothy K. Dolnier, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“Dolnier Letter”).

151. Letter from Nicholas E. Federici, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Federici Letter”).

152. Letter from Alex J. Lopez, Registered Principal/Equity Trader, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Giordano Letter”).

153. Letter from Michael D. Giordano, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Giordano Letter”).

154. Letter from Giangi Ratto, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Ratto Letter”).

155. Letter from Darren L. Heyman, Esquire, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Heyman Letter”).

156. Letter from Richard J. Travers III, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Travers Letter”).

157. Letter from Michael Feeney, to Jonathan G. Katz, Secretary, SEC, undated, received January 2, 2002 (“Feeney Letter”).

158. Letter from Ryan West, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“R. West Letter”).

159. Letter from Thomas F. Bradshaw, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Bradshaw Letter”).

160. Letter from John Kernan, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated received January 7, 2002 (“Kernan Letter”).

161. Letter from Douglas Squires, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Squires Letter”).

162. Letter from Christoper Ball, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“C. Ball Letter”).

163. Letter from David Kobin, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Kobin Letter”).

164. Letter from Alexander Chan, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“A. Chan Letter”).

165. Letter from Kenneth Garby, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received January 7, 2002 (“Garby Letter”).

166. Letter from Anton Panayotov, Equity Trader, to Jonathan G. Katz, Secretary, SEC, undated, received January 8, 2002 (“Panayotov Letter”).

167. Letter from Greg A. Oshins, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Oshins Letter”).

168. Letter from C. Kevin Yang, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Yang Letter”).

169. Letter from Samuel Oahana, Professional Trader, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Oahana Letter”).

170. Letter from Charles J. Kim, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“C. Kim Letter”).

171. Letter from Sunil Philip, Securities Trader, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Philip Letter”).

172. Letter from Harlan Thompson, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“H. Thompson Letter”).

173. Letter from Jonathan W. Hodges, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Hodges Letter”).

174. Letter from Yusef J. Burgess, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received January 8, 2002 (“Burgess Letter”).

175. Letter from Matthew Watts, Broker, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Watts Letter”).

176. Letter from John J. Raffaele, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Raffaele Letter”).

177. Letter from Peter Zlatkovic, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Zlatkovic Letter”).

178. Letter from David Sherman, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Sherman Letter”).

179. Letter from Alexander Benetti, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“Benetti Letter”).

180. Letter from Adam Sinclair, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Sinclair Letter”).

181. Letter from Nikhil Atreya, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Atreya Letter”).

182. Letter from Ilian Petrov, NASD Principal, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Petrov Letter”).

183. Letter from Richard Rebatta, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Rebatta Letter”).

184. Letter from Christopher H. Klaus, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Klaus Letter”).

185. Letter from John C. Giesa, President, and Michael A. Bird, Senior Vice Chairman, Security Traders Association, to Jonathan G. Katz, Secretary, SEC, dated December 12, 2001 (“STA Letter”).

186. Letter from Howard M. Liu, Securities Trader, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“H. Liu Letter”).

187. Letter from Frank J. Raffaele, Jr., Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 11, 2001 (“F. Raffaele Letter”).

188. Letter from Chris Gregg, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Greg Letter”).

189. Letter from Igor Stancevic, Registered Principal, to Jonathan G. Katz, Secretary, SEC, undated, received January 8, 2002 (“Stancevic Letter”).

190. Letter from Saeyoon Kim, Registered Principal, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“S. Kim Letter”).

191. Letter from Dokyun No, NASD Member, to Jonathan G. Katz, Secretary, SEC, undated, received January 8, 2002 (“D. No Letter”).

192. Letter from Kyle J. Schroeder, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“Schroeder Letter”).

193. Letter from Alexander Shatkin, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Shatkin Letter”).

194. Letter from Darin E. Cohen, Individual Investor, to Jonathan G. Katz, Secretary, SEC, undated, received January 8, 2001 (“D. Cohen Letter”).

195. Letter from Michael Sinnreich, Equity Trader, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Sinnreich Letter”).

196. Letter from Robert L. Oliver, Professional Trader, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Oliver Letter”).

197. Letter from Randy Gussin, Registered Representative, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, undated, received January 8, 2001 (“Gussin Letter”).

198. Letter from Bruce Hepner, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received January 8, 2001 (“Hepner Letter”).

199. Letter from Dror Ben-Aharon, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Ben-Aharon Letter”).

200. Letter from Bradford Kott, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Kott Letter”).

201. Letter from Matthew Schroeder, Registered Representative, NASD, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“Schroeder Letter”).

202. Letter from Jason Klarreich, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Klarreich Letter”).

203. Letter from Eli Lopin, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Lopin Letter”).

204. Letter from Ben Williams, Registered Representative, NASD, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“B. Williams Letter”).

205. Letter from Jason Towne, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated January 9, 2001 (“Towne Letter”).

206. Letter from Kiet T. Vo, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Vo Letter”).

207. Letter from Isaak Volodarsky, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Volodarsky Letter”).

208. Letter from Dario Cosic, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received January 9, 2001 (“Cosic Letter”).

209. Letter from Jason Herrick, to Jonathan G. Katz, Secretary, SEC, undated, received January 9, 2001 (“Herrick Letter”).

210. Letter from Simrin Dhillon, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 14, 2001 (“Dhillon Letter”).

211. Letter from Thomas N. McManus, Executive Director and Counsel, Morgan Stanley, to Jonathan G. Katz, Secretary, SEC, dated December 4, 2001 (“Morgan Stanley Letter”).

212. Letter from John Schmidt, Registered Principal, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, undated, received January 9, 2001 (“J. Schmidt Letter”).

213. Letter from Robert V. Morant, Registered Representative, to Jonathan G. Katz, Secretary, SEC, undated, received January 9, 2001 (“Morant Letter”).

214. Letter from Hirokazu Iwasa, to Jonathan G. Katz, Secretary, SEC, dated October 17, 2001 (“Iwasa Letter”).

215. Letter from Eric P. Knight, Equity Trader, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“E. Knight Letter”).

216. Letter from Junghyun Won, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Won Letter”).

217. Letter from Joshua A. D'Aleo, Equity Trader, Heartland Securities, to Jonathan G. Katz, Secretary, SEC, undated, received January 7, 2001 (“D'Aleo Letter”).

218. Letter from Kerry Senna, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“Senna Letter”).

219. Letter from Kon-Young Lee, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“K. Lee Letter”).

220. Letter from Alexander Wang, to Jonathan G. Katz, Secretary, SEC, dated October 16, 2001 (“A. Wang Letter”).

221. Letter from Charles William Hansford, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Hansford Letter”).

222. Letter from Cary S. Grill, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 12, 2001 (“Grill Letter”).

223. Letter from Jonathan Schuldenfrei, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Schuldenfrei Letter”).

224. Letter from Jeffrey Schulberg, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Schulberg Letter”).

225. Letter from Cornel Catrina, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Catrina Letter”).

226. Letter from Eliav Bock, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Bock Letter”).

227. Letter from Marina J. Kaneti, Registered Principal, to Jonathan G. Katz, Secretary, SEC, dated October 18, 2001 (“Kaneti Letter”).

228. Letter from Kristopher Goldhair, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Goldhair Letter”).

229. Letter from Joshua Weintraub, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Weintraub Letter”).

230. Letter from David Caputo, Registered Representative, to Jonathan G. Katz, Secretary, SEC, dated October 15, 2001 (“Caputo Letter”).

231. Letter from Tolga Erman, Registered Principal, to Jonathan G. Katz, Secretary, SEC, undated, received February 22, 2001 (“Erman Letter”).

232. Letter from Brenda C. Blackard, First Vice President, Manager Nasdaq Trading, Davenport & Company LLC, to Jonathan G. Katz, Secretary, SEC, dated March 7, 2001 (“Blackard Letter”).

233. Letter from Piers Fennell, Individual Investor, to Jonathan G. Katz, Secretary, SEC, dated April 2, 2001 (“Fennell Letter” ).