NASD Reminds Members That the SEC's "One Percent Rule" Requirements Apply to NASDAQ-listed Securities

April 25, 2007

NASD is reminding members that, because The NASDAQ Stock Market now operates as an exchange, those provisions of the federal securities laws that apply to exchange-traded securities now generally also apply to NASDAQ-listed securities. In particular, the "One Percent Rule" in Regulation NMS—which requires an NASD member that acts as an OTC market maker for an exchange-traded security to report its best bids, best offers and quotation sizes for those securities if the member is responsible for more than one percent of the aggregate trading volume for that security during the previous calendar quarter—now applies to NASDAQ-listed securities. OTC market makers can report the required information to NASD or a national securities exchange that meets the requirements under the recent SEC exemptive relief provided to NASD.1 Consequently, NASD is reminding members that they must assess whether they have quotation dissemination obligations under Regulation NMS with respect to NASDAQ-listed securities.

 

1 See Letter to T. Grant Callery, National Association of Securities Dealers, Inc., which is available on the SEC's web site at www.sec.gov/divisions/marketreg/mr-noaction/nasd072806.htm.