FYI: Approval of Limit Order Protection:
Saw this on RB just now:
By: boomboom72
Reply To: None
Wednesday, 26 Apr 2000 at 1:08 PM EDT
Post # of 8245
OT: NASDAQ BOARD APPROVES LIMIT ORDER PROTECTION
Found this one on Edis board just now.
Thought some of you would be interested in this.
Q00
otcbb.com
NASD Board Approves Limit Order Protection Pilot Program for the OTCBB
The National Association of Securities Dealers, Inc. (NASD©) Board has approved a
pilot program that will provide protection to investors who place limit orders for some OTC
Bulletin Board© (OTCBB) securities. If approved by the Securities and Exchange
Commission (SEC), the program will require Market Makers in a select group of OTCBB
securities to execute customer limit orders before trading for their own accounts.
Under the new program, Market Makers will be prohibited from executing proprietary
trades at prices superior or equal to a customer's limit order without providing
contemporaneous execution of the customer's order. Contemporaneous is defined as
"within a reasonable time frame, but not to exceed five minutes." This definition takes into
consideration the fact that, without an automated means of execution, Market Makers in
OTCBB securities must execute those orders manually.
"Since the introduction of the Internet as a mainstream marketing communications tool for
small issuers and innovative brokers, investor participation in the OTC
equity market has grown dramatically," said J. Patrick Campbell, chief operating officer of
Nasdaq. "We believe that these new investor protection provisions will greatly benefit the
OTCBB market."
If approved by the SEC, the 12-month "Limit Order Protection Pilot" program will phase in
300 OTCBB securities over a period of several weeks. The securities
selected to participate in the pilot will be chosen based on a price/volume liquidity
measure. The limited pilot program will allow the NASDAQ to track the trading patterns of
the pilot securities to determine what, if any, effect the OTCBB limit order protection rule
has on liquidity, price, and immediacy of execution before establishing a permanent rule.
In the last four years, the OTCBB has experienced growth of
106% in Market Maker positions, 687% in average daily share volume, and 96% in
average daily dollar volume. |
