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6951. Definitions

This rule is no longer applicable. NASD Rule 6951 has been superseded by FINRA Rule 7410. Please consult the appropriate FINRA Rule.

For purposes of the Rule 6950 Series:
(a) Terms shall have the same meaning as those defined in the By-Laws and Rules of the Association, unless otherwise specified.
(b) "Bunched Order" shall mean two or more orders that are aggregated prior to execution.

(c) "Customer" shall mean a person other than a broker or dealer.

(d) "Nasdaq Market Center" shall mean the service provided by Nasdaq that, among other things, provides for the reporting of transactions in Nasdaq securities.

(e) "Electronic Communication Network" shall mean any electronic system that widely disseminates to third parties orders entered therein by an exchange market maker or over-the-counter market maker, and permits such orders to be executed in whole or in part, and as further defined in SEC Rule 600(b)(23).

(f) "Electronic Order" shall mean an order captured by a member in an electronic order-routing or execution system.

(g) "Index Arbitrage Trade" shall mean an arbitrage trading strategy involving the purchase or sale of a "basket" or group of securities in conjunction with the purchase or sale, or intended purchase or sale, of one or more cash-settled options or futures contracts on index stock groups, or options on any such futures contracts in an attempt to profit by the price difference, as further defined in New York Stock Exchange Rule 80A.

(h) "Intermarket sweep order" shall have the same meaning as contained in SEC Rule 600(b)(30) adopted pursuant to the Act.

(i) "Manual Order" shall mean an order that is captured by a member other than in an electronic order-routing or execution system.

(j) "Order" shall mean any oral, written, or electronic instruction to effect a transaction in an equity security listed on the Nasdaq Stock Market or an OTC equity security that is received by a member from another person for handling or execution, or that is originated by a department of a member for execution by the same or another member, other than any such instruction to effect a proprietary transaction originated by a trading desk in the ordinary course of a member's market making activities.

(k) "Order Audit Trail System" shall mean the automated system owned and operated by the Association that is designed to capture order information in equity securities listed on the Nasdaq Stock Market and OTC equity securities reported by members for integration with trade and quotation information to provide the Association with an accurate time sequenced record of orders and transactions.

(l) "OTC equity security" shall mean any equity security that:
(1) is not listed on a national securities exchange; or
(2) is listed on one or more regional stock exchanges and does not qualify for dissemination of transaction reports via the facilities of the Consolidated Tape.
For purposes of the Rule 6950 Series, the term OTC equity security shall not include direct participation programs, as defined in Rule 6910.
(m) "Program Trade" shall mean a trading strategy involving the related purchase or sale of a group of 15 or more securities having a total market value of $1 million or more, as further defined in New York Stock Exchange Rule 80A.

(n) "Reporting Agent" shall mean a third party that enters into any agreement with a member pursuant to which the Reporting Agent agrees to fulfill such member's obligations under Rule 6955.

(o) "Reporting Member" shall mean a member that receives or originates an order and has an obligation to record and report information under Rules 6954 and 6955. A member shall not be considered a Reporting Member in connection with an order, if the following conditions are met:
(1) the member engages in a non-discretionary order routing process, pursuant to which it immediately routes, by electronic or other means, all of its orders to a single receiving Reporting Member;
(2) the member does not direct and does not maintain control over subsequent routing or execution by the receiving Reporting Member;
(3) the receiving Reporting Member records and reports all information required under Rules 6954 and 6955 with respect to the order; and
(4) the member has a written agreement with the receiving Reporting Member specifying the respective functions and responsibilities of each party to effect full compliance with the requirements of Rules 6954 and 6955.

Amended by SR-NASD-2007-028 eff. Feb. 4, 2008.
Amended by SR-NASD-2005-101 eff. Feb. 4, 2008.
Amended by SR-NASD-2006-091 eff. March 5, 2007.
Amended by SR-NASD-2007-019 eff. March 1, 2007.
Amended by SR-NASD-2006-087 eff. Aug. 1, 2006
Amended by SR-NASD-2005-087 eff. Aug. 1, 2006.
Amended by SR-NASD-2004-076 eff. May 5, 2004.
Adopted by SR-NASD-97-56 eff. according to schedule in Rule 6957.

Selected Notice: 98-33, 06-70.