In the very beginning, long long ago, SOES tickets were $60.00 each side and you had to stand behind an armpit high wall and call orders to registered inputters in a "different" room. Then, for awhile, you were only permitted 4 SOES trades per account, per day. Finally, there was the '5 minute rule,' which nearly every broker-dealer seemed to interpret differently. SOES has been through a large number of changes since it was made mandatory in 1987 following the crash.
Despite these, however, the factors which (in my opinion) made it the least viable execution system include (a) the January 1997 Order Handling Rules and the subsequent phase in ("100 share pilot") of issues for which market makers were only obligated to be firm for 100 shares at a time, and (b) the advent of faster, more liquid/functional systems (ECN's and ATS's) which were ironically born of those same Order Handling Rules, under SEC 17a-23.
I seem to recall that SOES began to really lost its' usefulness in the late winter and spring months ranging from 1997 to 1998, and that by summer 1998, most people were using SOES only in emergencies, and then rarely.
If you're still fuzzy, check out the following either on the internet or at your local SEC regional office or NASD district office: SEC 21a (Order Handling Rules); SEC 11Ac1-1 (Firm Quote Rule); NASD 3310 (Publication Transactions/Quotations); NASD 3320 (Offers at Published Prices).
LPS5
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