NASD Notice to Members 05-69 - October 2005

SEC Approves New Rule 2111 Prohibiting Members from Trading Ahead of Customer Market Orders Under Certain Circumstances; Effective Date: January 9, 2006

Executive Summary

On August 9, 2005, the Securities and Exchange Commission (SEC) approved new Rule 2111, Trading Ahead of Customer Market Orders, which prohibits a firm that accepts and holds a customer market order from trading for its own account at prices that would satisfy the customer market order, unless the firm immediately thereafter executes the customer market order. Rule 2111, as adopted, is set forth in Attachment A of this Notice. NASD will be publishing shortly, in a separate Notice, questions and answers regarding the application of the new rule. The rule becomes effective on January 9, 2006.

 

Questions regarding this Notice may be directed to the Legal Section, Market Regulation, at (240) 386-5126, or Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8071.

 

See Securities Exchange Act Release No. 52226 (August 9, 2005), 70 FR 48219 (August 16, 2005) (File No. SR-NASD-2004-045).