NASD<------------Circumvents SEC actions, on excessive spreads and Changes rules to allow Market makers to have almost ZERO risk..by reducing minimum tier size from 1000 shares down all the way to 100 shares..Increasing volatility and fee revenue to the NASD, and attempting to guarantee NASDAQ's Meteoric rise,based on Sentiment & not true market fundamentals!!!!!!!!!!!!!( READ LAST PARAGRAPH)!
( by backdooring rule that on the surface is meaningless and deceptive--resulting in--> getting SEC approval )
NASD Notice to Members 98-76
Maximum SOES Order Sizes Set To Change October 1, 1998
Executive Summary
Effective October 1, 1998, the maximum Small Order Execution SystemSM
(SOESSM) order sizes for 488 Nasdaq National Market® (NNM) securities will
be revised in accordance with National Association of Securities Dealers, Inc.
(NASD®) Rule 4710(g).
For more information, please contact Nasdaq® Market Operations at (203) 378-
0284.
Description
Under Rule 4710, the maximum SOES order size for an NNM security is 1,000,
500, or 200 shares, depending on the trading characteristics of the security. The
Nasdaq Workstation II® (NWII) indicates the maximum SOES order size for each
NNM security. The indicator “NM10,” “NM5,” or “NM2” displayed in NWII
corresponds to a maximum SOES order size of 1,000, 500, or 200 shares,
respectively.1
The criteria for establishing maximum SOES order sizes are as follows:
(1) a 1,000-share maximum order size shall apply to NNM securities on SOES
with an average daily non-block volume of 3,000 shares or more a day, a bid price
of less than or equal to $100, and three or more Market Makers;
(2) a 500-share maximum order size shall apply to NNM securities on SOES with
an average daily non-block volume of 1,000 shares or more a day, a bid price of
less than or equal to $150, and two or more Market Makers; and
(3) a 200-share maximum order size shall apply to NNM securities with an
average daily non-block volume of less than 1,000 shares a day, a bid price of less
than or equal to $250, and two or more Market Makers.
In accordance with Rule 4710, Nasdaq periodically reviews the maximum SOES
order size applicable to each NNM security to determine if the trading
characteristics of the issue have changed so as to warrant an adjustment. Such a
review was conducted using data as of June 30, 1998, pursuant to the
aforementioned standards. The maximum SOES order-size changes called for by
this review are being implemented with three exceptions.
• First, issues were not permitted to move more than one size level. For example,
if an issue was previously categorized in the 1,000-share level, it would not be
permitted to move to the 200-share level, even if the formula calculated that such
a move was warranted. The issue could move only one level to the 500-share level
as a result of any single review.
• Second, for securities priced below $1 where the reranking called for a reduction
in the level, the maximum SOES order size was not reduced.
• Third, for the top 50 Nasdaq securities based on market capitalization, the
maximum SOES order sizes were not reduced, regardless of whether the
reranking called for a reduction.
In addition, with respect to initial public offerings (IPOs), the SOES order-size
reranking procedures provide that a security must first be traded on Nasdaq for at
least 45 days before it is eligible to be reclassified.
Thus, IPOs listed on Nasdaq within the 45 days prior to June 30, 1998, were not
subject to SOES order-size reranking procedures.
Following is a listing of the 488 NNM issues that will have the maximum SOES
order size changed on October 1, 1998.
Endnote
1 Previously, Nasdaq Market Makers were required to maintain a minimum
quotation size for an NNM security in an amount equal to the maximum SOES
order size for that security. See generally, NASD Rule 4613(a)(1) - (2). On July
15, 1998, the Securities and Exchange Commission approved an amendment to
NASD Rule 4613(a)(1)(C), which reduced the minimum quotation size for all
Nasdaq securities to one normal trading unit when a Market Maker is not
displaying a limit order, and which thus eliminated the requirement that Market>
<Makers> <quote> a size equal to the maximum SOES order size.
© 1998, National Association of Securities Dealers, Inc. (NASD). All rights
|
