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6560. Limit Order Protection
This rule has been deleted by SR-FINRA-2008-057. Once effective, this rule will no longer appear in the FINRA Manual.
(a) Members shall be prohibited from "trading ahead" of customer limit orders that a member accepts in securities quoted on the OTCBB. Members handling customer limit orders, whether received from their own customers or from another member, are prohibited from trading at prices equal or superior to that of the customer limit order without executing the limit order. Members are under no obligation to accept limit orders from any customer.
(b) Members may avoid the obligation specified in paragraph (a) through the provision of price improvement. If a customer limit order is priced at or inside the current inside spread, however, the price improvement must be for a minimum of the lesser of $0.01 or one-half (1/2) of the current inside spread. For purposes of this Rule, the inside spread shall be defined as the difference between the best reasonably available bid and offer in the subject security.
(c) Notwithstanding paragraph (a) of this Rule, a member may negotiate specific terms and conditions applicable to the acceptance of limit orders only with respect to such orders that are:
(1) for customer accounts that meet the definition of an "institutional account" as that term is defined in NASD Rule 3110(c)(4); or
(2) for 10,000 shares or more, and greater than $20,000 in value.
(d) Contemporaneous trades
A member that trades through a held limit order must execute such limit order contemporaneously, or as soon as practicable, but in no case later than five minutes after the member has traded at a price more favorable than the customer's price.
(1) This Rule shall apply, regardless of whether the subject security is additionally quoted in a separate quotation medium.
(2) This Rule shall apply from 9:30 a.m. to 4:00 p.m. Eastern Time.
|Deleted by SR-FINRA-2008-057 eff. Dec. 15, 2008.
Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
Amended by SR-NASD-2007-039 eff. July 26, 2007.
Amended by SR-NASD-2005-146 eff. July 26, 2007.
Amended by SR-NASD-2002-153 eff. Jan. 6, 2002.
Amended by SR-NASD-2001-78 eff. Nov. 1, 2001.
Amended by SR-NASD-2001-39 eff. Aug. 1, 2001.
Adopted by SR-NASD-2000-22 eff. Feb. 8, 2001.
Selected Notices: 01-46, 08-57.