6272. Character of Quotations
(a) Quotation Requirements and Obligations
A member registered as a Registered Reporting ADF Market Maker shall engage in a course of dealings for its own account to assist in the maintenance, insofar as reasonably practicable, of fair and orderly markets in accordance with this Rule.
(1) Two-Sided Quote Obligation.
For each ADF-eligible security for which a member is a Registered Reporting ADF Market Maker, the member shall be willing to buy and sell such security for its own account on a continuous basis during regular market hours and shall enter and maintain a two-sided trading interest ("Two-Sided Obligation"), subject to the procedures for excused withdrawal set forth in Rule 6275.
Interest eligible to be considered as part of the Registered Reporting ADF Market Maker's Two-Sided Obligation shall have a displayed quotation size of at least one normal unit of trading (or a larger multiple thereof); provided, however, that a Registered Reporting ADF Market Maker may augment its Two-Sided Obligation size to display limit orders priced at the same price as the Two-Sided Obligation. Unless otherwise designated, a "normal unit of trading" shall be 100 shares. After an execution against its Two-Sided Obligation, a Registered Reporting ADF Market Maker must ensure that additional trading interest exists to satisfy its Two-Sided Obligation either by immediately entering new interest to comply with this obligation to maintain continuous two-sided quotations or by identifying existing interest on the ADF that will satisfy this obligation.
(2) Pricing Obligations for Registered Reporting ADF Market Makers.
For ADF-eligible securities, a Registered Reporting ADF Market Maker shall adhere to the pricing obligations established by this Rule during the trading day; provided, however, that such pricing obligations (i) shall not commence during any trading day until after the first regular way transaction on the primary listing market in the security, as reported by the responsible single plan processor, and (ii) shall be suspended during a trading halt, suspension, or pause, and shall not recommence until after the first regular way transaction in the primary listing market in the security following such halt, suspension, or pause, as reported by the responsible single plan processor, except as permitted under the Regulation NMS Plan to Address Extraordinary Market Volatility.
(A) Bid Quotations.
At the time of entry of bid interest satisfying the Two-Sided Obligation, the price of the bid interest shall be not more than the Designated Percentage away from the then current National Best Bid, or if no National Best Bid, not more than the Designated Percentage away from the last reported sale from the responsible single plan processor. In the event that the National Best Bid (or if no National Best Bid, the last reported sale) increases to a level that would cause the bid interest of the Two-Sided Obligation to be more than the Defined Limit away from the National Best Bid (or if no National Best Bid, the last reported sale), or if the bid is executed or cancelled, the Registered Reporting ADF Market Maker shall enter new bid interest at a price not more than the Designated Percentage away from the then current National Best Bid (or if no National Best Bid, the last reported sale), or identify to FINRA current resting interest that satisfies the Two-Sided Obligation.
(B) Offer Quotations.
At the time of entry of offer interest satisfying the Two-Sided Obligation, the price of the offer interest shall be not more than the Designated Percentage away from the then current National Best Offer, or if no National Best Offer, not more than the Designated Percentage away from the last reported sale from the responsible single plan processor. In the event that the National Best Offer (or if no National Best Offer, the last reported sale) increases to a level that would cause the offer interest of the Two-Sided Obligation to be more than the Defined Limit away from the National Best Offer (or if no National Best Offer, the last reported sale), or if the bid is executed or cancelled, the Registered Reporting ADF Market Maker shall enter new offer interest at a price not more than the Designated Percentage away from the then current National Best Offer (or if no National Best Offer, the last reported sale), or identify to FINRA current resting interest that satisfies the Two-Sided Obligation.
(3) Quotations Closer to the National Best Bid or Offer.
Nothing in this Rule shall preclude a Registered Reporting ADF Market Maker from quoting at price levels that are closer to the National Best Bid and Offer than the levels required by this Rule.
(4) Definitions.
For purposes of this Rule:
(A) the "Defined Limit" shall be:
(i) 9.5% for Designated Stocks (except that between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close of trading, the Defined Limit for Designated Stocks shall be 21.5%);
(ii) 29.5% for Other NMS Stocks with a price equal to or greater than $1; and
(iii) 31.5% for Other NMS Stocks with a price less than $1.
(B) the "Designated Percentage" shall be:
(i) 8% for Designated Stocks (except that between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close of trading, the Designated Percentage for Designated Stocks shall be 20%);
(ii) 28% for Other NMS Stocks with a price equal to or greater than $1; and
(iii) 30% for Other NMS Stocks with a price less than $1.
(C) the term “Designated Stock” shall mean an ADF-eligible security that is included in the S&P 500® Index, Russell 1000® Index, or a pilot list of Exchange Traded Products;
(D) the term “Other NMS Stock” shall mean any ADF-eligible security that is not a Designated Stock; and
(E) the determination of the price of a stock shall be based on the closing price on the previous trading day, or, if no closing price exists, the last sale reported to the Consolidated Tape on the previous trading day.
(b) Minimum Price Variation for Quotations
The minimum quotation increment for quotations of $1.00 or above in all ADF-eligible securities shall be $0.01. The minimum quotation increment for quotations below $1.00 in all ADF-eligible securities shall be $0.0001. Quotations failing to meet this standard shall be rejected.
(c) Firm Quotations
(1) Consistent with Rule 602(b)(2) of SEC Regulation NMS, an ADF Trading Center that receives an offer to buy or sell from another broker-dealer shall execute a transaction for at least a normal unit of trading at its displayed quotations as disseminated through the ADF at the time of receipt of any such offer. If an ADF Trading Center displays a quotation for a size greater than a normal unit of trading, it shall, upon receipt of an offer to buy or sell from another broker-dealer, execute a transaction at least at the size displayed.
(2) If an ADF Trading Center, upon receipt of an offer to buy or sell from another broker-dealer in any amount that is at least one normal unit of trading greater than its published quotation size as disseminated through the ADF at the time of receipt of any such offer, executes a transaction in an amount of shares less than the size of the offer, then such ADF Trading Center shall, immediately after such execution, display a revised quotation at a price that is inferior to its previous published quotation. The failure of an ADF Trading Center to execute the offer in an amount greater than its published quotation size shall not constitute a violation of paragraph (c)(1) of this Rule.
(d) Quotations and quotation sizes in ADF-eligible securities may be entered into the ADF only by a Registered Reporting ADF Market Maker or Registered Reporting ADF ECN or other entity approved by FINRA to function in such a capacity. The ADF's protected quotation will be identified by FINRA based upon price, size and time priority.
| Amended by SR-FINRA-2014-016 eff. May 1, 2014. Amended by SR-FINRA-2013-053 eff. Feb. 3, 2014. Amended by SR-FINRA-2013-031 eff. Feb. 3, 2014. Amended by SR-FINRA-2011-023 eff. Aug. 8, 2011. Amended by SR-FINRA-2010-049 eff. Dec. 6, 2010. Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008. Amended by SR-NASD-2008-003 eff. Jan. 25, 2008. Amended by SR-NASD-2007-001 eff. March 5, 2007. Amended by SR-NASD-2006-091 eff. March 5, 2007. Amended by SR-NASD-2007-008 eff. Jan 26, 2007. Amended by SR-NASD-2006-096 eff. Aug. 8, 2006. Amended by SR-NASD-2005-087 eff. Aug. 1, 2006. Amended by SR-NASD-2003-175 eff. Mar. 12, 2004. Amended by SR-NASD-2003-181 eff. Dec. 4, 2003. Amended by SR-NASD-2003-67 eff. April 7, 2003. Adopted by SR-NASD-2002-97 eff. July 29, 2002. Selected Notices: 08-57, 14-04. |