INDUSTRY NEWS

Regulation SHO Under Securities Exchange Act of 1934

Source: Securities Exchange Commission (December 2, 2004)

This notice is being issued to inform IDA Member firms (Member) of the SEC adoption of the new Regulation SHO under the Securities Act of 1934, effective September 7, 2004, except Part 241, which was effective August 6, 2004 and 242.202T will be effective from September 7, 2004 to September 7, 2007.

Regulation SHO defines ownership of securities, specifies aggregation of long and short positions, and requires broker-dealers to mark sales in all equity securities .long., .short., or .short exempt.. Regulation SHO requires short sellers in all equity securities to locate securities to borrow before selling, and also imposes additional delivery requirements on broker-dealers for securities in which a substantial number of failures to deliver have occurred.

For further details refer to Regulation SHO Release No.34-50103. NASD Notice to Members at the following URL link: http://www.sec.gov/rules/final/34-50103.htm

It is our expectation that Members trading directly or indirectly on SEC regulated markets will adjust their trading practices to comply with this rule. Failure by a member to comply with this rule may be considered to be engaging in a .conduct or practice that is unbecoming or detrimental to the public interest. and therefore a breach of IDA By-law 29.1.