Insertions and deletions are normally only tolerated at surface non-secondary structure positions of the native protein structure [23]. Accordingly, the location of insertions and deletions in an accurate multiple alignment is a strong indicator of a surface loop, or non-core secondary structure in the native three dimensional structure. There are 16 regions predicted as loop. Of these 10 correspond to the location of insertions/deletions either within the eukaryotic phosphatases, or when the phage and E. coli proteins are included (loops at: 6-22, 45-53, 74-82, 87-93, 98-117, 128-131, 151-159, 188-195, 223-269, 298-315). Further support for loop prediction is gained from the observed conservation of Proline and Glycine and a predominance of polar residues. For example, between 45-53 there are 4 and 6 residue insertions in PP5 and S. cerevisiae PPT, while there is a conserved proline at 53. The 6 predicted loops that do not include insertions/deletions occur at 58-63,136-143, 181-183, 207-215, 275-277 and 284-287. Loop 58-63 includes residues invariant throughout all known phosphatase sequences (Gly 58, Asp 59, His 61 and Gly 62) and may therfore form part of the catalytic site. Similarly, loop 136-143 contains conserved basic and acidic residues (Arg 136, Gly 137, Asn 138, His 139 and Glu 140) and may also contribute to the catalytic site.