*OT* Encouraging new NASD rules:
Thursday January 27, 4:02 pm Eastern Time
Company Press Release
SOURCE: National Association of Securities Dealers, Inc.
NASD Board Approves Limit Order Pilot Protection Program
For the OTC Bulletin Board
WASHINGTON, Jan. 27 /PRNewswire/ -- The National
Association of Securities Dealers, Inc.
(NASD©), today announced that its 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. Securities selected will be the 200 most
active plus an additional 100 to complete the pilot based
on other factors including some that have been delisted from The
Nasdaq Stock Market© and now trade on the OTCBB.
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.
The OTCBB is a quotation medium for subscribing members, not
an issuer listing service, and should not be confused with
The Nasdaq Stock Market(SM). OTCBB securities are traded by
a community of Market Makers that enter quotes and trade
reports through a highly sophisticated, closed computer network,
which is accessed through Nasdaq Workstation IITM.
OTCBB companies are not required to meet Nasdaq listing
standards.
The National Association of Securities Dealers, Inc., is the largest
securities-industry, self-regulatory organization in the
United States. It is the parent organization of The Nasdaq Stock
Market©, The American Stock Exchange©, and NASD
Regulation, Inc. For more information about the NASD and its
subsidiaries, please visit the following Web sites:
www.nasd.com; www.nasdaq.com; www.amex.com;
www.nasdr.com; or the Nasdaq Newsroom(SM) at
www.nasdaqnews.com. For more information about the OTC
Bulletin Board, please visit www.otcbb.com.
SOURCE: National Association of Securities Dealers, Inc. |
