The Island ECN, Inc. Island commends the Commission for its decision to examine ways to modernize its regulation of short sales of securities. Island understands and appreciates the challenges faced by the Commission with respect to amending a rule that has gone unchanged for so many years and which tends to generate more emotional than scholarly commentary.
Island operates an automated, electronic limit order book.
The Island limit order book automatically and instantaneously executes all matching orders in accordance with strict price and time priority. Orders placed on the Island limit order book have the opportunity to interact with orders of other Island subscribers as well as orders delivered to Island through the Nasdaq SelectNet Linkage. Island believes there is no economic rationale for short sale regulation and that such regulation impedes overall market efficiency. A short sale is simply the use of leverage in connection with a securities transaction. Rule 10a-1 is an unnatural inhibitor of downward price movements where leverage is being employed.