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| • Directed orders, which are generally nonliability orders, must be responded to within five seconds of receipt |
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• Once decremented to zero, the firm has 30 seconds to update. If, after 30 seconds, the firm does not update or voluntarily withdraw as a market maker, Nasdaq will automatically refresh its quote for 100 shares to $.01 away from the worst displayed price in the montage.
• All trades must be reported to ACT within 30 seconds of execution.
• Transactions in listed securities traded over the counter must be reported to the Consolidated Tape within 30 seconds
• For trades executed during normal hours and canceled at or before 4:00, the cancellation report must be made within 30 seconds of the time the trade is canceled. For trades executed during normal hours and canceled after 4:00 but before 8:00 pm, the member responsible must use its best efforts to report the cancellation not later than 8:00. If the member is unable to do so, it must report the cancellation by 8:00 pm on the follow-ing business day.
• A customer order that improves a market maker's price or size must be displayed immediately, which according to the SEC, means within 30 seconds of receipt.
• ACT is open from 8:00 am until 8:00 pm. Trades executed within this time frame must be reported within 30 seconds. |
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• When a member has become registered as a third-market maker, a request for registration as a market maker in additional securities is effective immediately.
• FINRA disseminates TRACE-generated reports to the public immediately after receipt. |
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| • There is a five-minute window that allows market makers to adjust their quotes before the reopening of trading. |
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• Under ACT rules, a clearing broker has the option to review certain trades executed by its correspondent market makers prior to becoming obligated to clear these trades. If a correspondent market maker executes a trade that equals or exceeds the single trade limit (currently $1 million), the clearing broker has 15 minutes to determine if it will accept the trade.
Trades must be reported within 15 minutes of execution. |
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| OATS reports must be submitted to FINRA daily. |
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Term
| Last 20 minutes of trading |
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Definition
| • Normal hours for the NYSE are between 9:30 am and 4:00 pm. The Consolidated Tape, which shows quotes for listed equity securities, is open from 9:00 am until 6:30 pm. |
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| • If the DJIA were to fall by 30% or more before 1:00 pm, the NYSE and Nasdaq would close for the remainder of the day. |
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| • Re-registration as a CQS market maker after a voluntary termination of registration is not allowed for one business day. Nasdaq market makers are subject to a penalty period of 20 business days following voluntary termination. |
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| • Form 211 must be filed with FINRA at least three business days prior to entering quotations in either OTC Pink or the OTCBB. |
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• As long as the firm has made a continuous market in the stock during the 30 calendar days prior to delisting, it can immediately become a Bulletin Board market maker without having to file Form 211.
• If a security is delisted from Nasdaq, a Nasdaq market maker in that security can immediately become a Bulletin Board market maker without having to file Form 211 if delisting was solely due to the issuer's failure to meet maintenance listing standards, and the market maker made a continuous market in that security during the 30 calendar days prior to delisting. |
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Term
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Definition
• The SEC may suspend trading on any national securities exchange for up to 90 calendar days. It may also suspend trading in any security, for whatever reason, for up to ten business days.
• Companies may qualify for listing based, in part, on their market capitalization. Companies that are currently traded on another market must meet the bid price and market cap requirements for 90 consecutive days prior to applying to Nasdaq. The 90-day period is called the seasoning period. |
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Term
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Definition
| • Member firms subject to this rule must make publicly available reports on a quarterly basis identifying the market centers to which they route a significant percentage of orders, and showing any payment for order flow arrangements they have with these centers. Upon customer request, firms must also provide information on where the customer's nondirected orders were routed for execution during the previous six-month period. |
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Definition
| • Customers must be notified in writing at least annually of their right to request information on how and where their nondirected orders were routed for execution. Requests from customers can only cover orders executed during the previous six-month period. |
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| 5% or less of total revenue |
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Definition
| • The penny stock disclosure rules are as follows. Rule 15(g)2 states that customers must receive, before their initial transaction, a copy of the risk disclosure document. Rule 15(g)3 states that customers must receive a current bid and ask quote on the penny stock. Rules 15(g)4 and 15(g)5 state that customers must receive information on the compensation to be earned by both the member and the registered representative as a result of the transaction. Rule 15(g)6 states that customers must receive monthly statements showing the market value of each penny stock purchased. If a member's revenue from penny stock transactions is 5% or less of total revenue, none of the above disclosures are required. |
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Definition
| • NYSE Rule 80B, the circuit-breaker rule, deals with market halts based on a decline in the DJIA. There are three levels of trading halts. Level I is activated when the DJIA falls by 10% or more. If a 10% decline occurs before 2:00 pm, the markets close for one hour. If it occurs between 2:00 pm and 2:29 pm, the halt is for 30 minutes. The NYSE calculates the trigger levels at the beginning of each calendar quarter, using the average closing value of the DJIA for the prior month, establishing specific point values for the quarter |
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Term
| Decrease of 30% or more in DJIA |
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Definition
| • If the DJIA falls by 30% or more, the markets will close for the remainder of the day. There are three levels of halts: Level I is activated if the average falls 10%, Level II when the decline is 20%, and Level III when the decline is 30%. These halts are referred to as the circuit breaker rules. This is not to be confused with SEC Rule 201, an uptick rule designed to restrict short selling from driving down the price of a stock that has dropped more than 10% in a single day. |
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Definition
| • Throughout the industry, a block trade is one of at least 10,000 shares or a quantity of stock having a value of at least $200,000. Note that under NYSE Rule 97, which deals with block positioning, a block is defined as a quantity of stock having a market value of at least $500,000. |
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Term
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Definition
| • NYSE Rule 97 defines a block of stock as one having a market value of $500,000 or more. Compare this with SEC Rule 3b-8, which defines a block as having a market value of $200,000 or more. Also note that under NYSE Rule 127, a block is defined as having a value of $200,000 or more. |
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Definition
| • Short positions in Nasdaq securities in both customer and proprietary accounts must be reported to FINRA twice a month. This is referred to as short interest reporting |
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Definition
| • Provided there are at least two priced quotations available electronically, the Three Contact Rule does not apply |
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Term
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Definition
| • A member must contact a minimum of three dealers (or all dealers if three or less) to determine the prevailing market. If two or more priced quotations are available, this requirement is waived. |
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Definition
| • The minimum size for Bulletin Board priced quotes ranges from 5,000 shares to 100 shares, depending on the bid and offer price. A different minimum size requirement could apply to the bid and the offer. |
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Definition
| • Under the limit order protection rule, members may not trade ahead of customer limit orders, meaning that members are prohibited from trading at prices equal to any limit order they are holding without executing that order. However, in certain cases the SEC does allow market makers to trade alongside customer limits. Exceptions are allowed for institutional orders and for retail orders of 10,000 shares or more and a value of $100,000 or more. A customer whose order is being traded along with must have given permission to the member. For example, an institution wants to buy 80,000 WXYZ at $65.55 and the member accepting the order has an understanding with the customer that it will trade along on a 50/50 basis. If 50,000 shares become available at $65.55, rather than execute the entire amount for the customer's account, the market maker will take 25,000 and execute 25,000 for the customer. |
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Term
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Definition
| • Under the limit order protection rule, members may not trade ahead of customer limit orders, meaning that members are prohibited from trading at prices equal to any limit order they are holding without executing that order. However, in certain cases the SEC does allow market makers to trade alongside customer limits. Exceptions are allowed for institutional orders and for retail orders of 10,000 shares or more and a value of $100,000 or more. A customer whose order is being traded along with must have given permission to the member. For example, an institution wants to buy 80,000 WXYZ at $65.55 and the member accepting the order has an understanding with the customer that it will trade along on a 50/50 basis. If 50,000 shares become available at $65.55, rather than execute the entire amount for the customer's account, the market maker will take 25,000 and execute 25,000 for the customer. |
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Term
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Definition
| Maximum order size is 999,999 shares. Larger orders may be split to get under the size limits of the system |
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| Normal Business hours and Extended Trading hours |
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Definition
| Limit orders must be protected during the hours when quotes must be firm (9:30 am-6:30 pm) |
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| Before market open each day |
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Definition
| FINRA rules require members to synchronize their clocks before the opening of trading on each business day. |
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Definition
| • Unless an order imbalance of 50,000 shares or more exists, MOC orders may not be entered after 3:45 PM ET. This is not to be confused with Nasdaq's MOC cut off time of 3:50 PM |
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| MOC orders CANNOT be entered or adjusted after 3:50 pm |
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| GTC limit orders are only protected between 9:30 am and 4:00 pm ET. |
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