Regulatory Notice 08-49

FINRA Announces Effective Date for Expansion of NASD IM-2110-2 to OTC Equity Securities and Revised Minimum Price-Improvement Standards in IM-2110-2; Effective Date: November 11, 2008

Executive Summary

Effective November 11, 2008, the requirements in NASD Interpretive Material (IM) 2110-2 (Trading Ahead of Customer Limit Order) apply to over-the-counter (OTC) equity securities, as defined in NASD Rule 6610(d).1 Also effective November 11, 2008, the minimum level of price improvement that firms must provide to trade ahead of an unexecuted customer limit order under IM-2110-2 is based on tiered standards that vary according to the price of the customer limit order.2 The revised price-improvement standards apply to both OTC equity securities and NMS stocks. The text of IM-2110-2, as amended, is set forth in Attachment A of this Notice.

 

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

 

1 See Securities Exchange Act Release No. 55351 (February 26, 2007), 72 FR 9810 (March 5, 2007) (order approving SR-NASD-2005-146). See also Notice to Members 07-19 (April 2007).

 

2 See Securities Exchange Act Release No. 58532 (September 12, 2008) (order approving SR-NASD-2007-041), available at http://www.sec.gov/rules/sro/nasd/2008/34-58532.pdf.