I read your post again and you are totally misinformed.
A reply from the totally misinformed: There has indeed been a change since I last read the rule, but my understanding of the rule is in fact the way NASD stated it. I quote from the NASD Notices to Members 99-21, dated January 13, 1999
NASD Rule 4730(c)(3) prohibits the splitting of orders larger than the applicable SOES maximum share size order limit into smaller parts so as to make any of those smaller parts eligible for entry into SOES. For example, it is a violation of NASD rules to break up a 5,000-share order for a Nasdaq security having a 1,000-share SOES order entry limit into five separate 1,000-share segments and then enter each of those five 1,000-share segments into SOES. Likewise, the splitting of a 5,000-share order into a 4,000-share SelectNetSM order and a 1,000-share SOES order would, in Nasdaq's view, also violate the prohibition on order splitting.
The full notice is at
secure.nasdr.com
After you read it, you will be well informed, and perhaps totally confused. It seems NASD is no longer presuming that orders placed within five minutes constitute a single investment decision, and so it sounds like the "five minute rule" no longer exists. But it is still against the rules to break up an order for the sake of circumventing the SOES limit rule stated above.
While eliminating the single investment decision presumption, it is important to note that the restrictions on splitting up larger orders to obtain SOES access contained in NASD Rule 4730(c)(3) remain in effect and, if violated, may still serve as the basis for disciplinary action by NASD Regulation, Inc. The elimination of the presumption changes only the procedures for enforcing the rule, and makes no changes to the rule's substantive mandates. In short, the splitting of larger orders into smaller parts to obtain SOES access remains prohibited.
I expect there will be a round or two of interpretation of this change. If there is no time limit, how anyone will ever decide what constitutes breaking up a single order is beyond me. |
