Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Naked Shorting-Hedge Fund & Market Maker manipulation? -- Ignore unavailable to you. Want to Upgrade?

To: rrufff who wrote (2898)	10/20/2007 8:02:26 PM
From: rrufff	Respond to of 5034

FINRA Adjusts OTC Manning Peter Chapman October 05, 2007 One size does not fit all. That’s what the Financial Industry Regulatory Authority (FINRA) discovered when it set out to adapt its Manning rules to over-the-counter trading. Dealers complained that rules designed for the listed markets would unfairly pinch their bottom lines when trading certain OTC names. So FINRA made some adjustments. Manning prohibits dealers from trading against incoming orders at prices equal to or less than any contra-side customer limit orders they may be holding. That’s known as trading ahead. The rule applies to trading in listed securities today, and will be extended to OTC securities next month. If they want to trade with those incoming orders, dealers must “price improve” them, or trade at prices better than the competing limit order. In listed trading, dealers must price improve orders for stocks trading over a dollar by a penny. For orders in stocks trading less than a dollar, the least amount of price improvement they must give is one cent or half the spread, whichever is less. Those rules apply to limit orders in stocks priced inside the best bid or offer. There are also rules for limit orders priced outside the BBO and where there is no inside market. The problem with the rules for the OTC dealers was that many of the stocks in which they make markets sell for less than a penny. Some even sell for less than one thousandth of a cent! For those stocks, dealers told FINRA, its sub-dollar price improvement standards would be overly burdensome. Paying half the current spread might be too much. FINRA now proposes to stratify the penny stock universe into four tiers for purposes of Manning. Orders for stocks selling for less than a penny but more than one-tenth of a cent, for instance, need only be price improved by one-tenth of a cent or half the spread, whichever is less. If one-tenth of a cent is less than half the spread, the dealer fares better (pays less) than he would have under the original proposal. FINRA will also liberalize its rules for OTC stocks trading over $1. That’s because these stocks can be quoted and traded in sub-penny increments. Therefore, dealers only need price improve the incoming order by half the spread if it equals less than one cent. FINRA also plans to loosen the requirements for price improving incoming orders in stocks when the limit order is priced away from the inside. (c) 2007 Traders Magazine and SourceMedia, Inc. All Rights Reserved. tradersmagazine.com sourcemedia.com

To: rrufff who wrote (2898)	10/20/2007 8:17:22 PM
From: rrufff	Respond to of 5034

Pink Sheets Presses SEC on ADRs Editorial Staff September 11, 2007 Pink Sheets, for the second time in two years, is calling on the Securities and Exchange Commission to require the Financial Industry Regulatory Authority (FINRA) to disseminate last-sale data on American Depository Receipts (ADRs) traded over the counter in real time. "It is shocking that U.S. investors are unable to monitor the quality of executions they receive from their broker-dealers in such an important part of the market for OTC equity securities," Cromwell Coulson, Pink Sheets' chief executive, told the SEC in a letter. ADRs traded in the pinks account for about $300 million a day in trades, according to Pink Sheets. That's double the traded value of the entire OTC Bulletin Board, the more respected half of the OTC marketplace. Pink Sheets made its plea as part of the regulatory approval process underway to strengthen the front-running rules governing the OTC market. FINRA (formerly the NASD) will begin applying the Manning Rule, which covers trading ahead of customer limit orders in Nasdaq securities, to the OTC market in November (see separate article). That is expected to result in an increase in limit orders. Customers whose limit orders in ADR names are filled would benefit if ADR trades were publicly reported in real time, Pink Sheets argues. Today, FINRA just disseminates a summary of OTC ADR trading activity at the end of the day. FINRA executives maintain they are willing to disseminate the information, but are prevented from doing so by the SEC. At a breakfast this summer in Jersey City, N.J., sponsored by the Security Traders Association of New York, traders asked a FINRA representative why FINRA would not transmit real-time trade reports in OTC ADRs. The executive told the group that FINRA was ready to do so, but the SEC was opposed to the move. The SEC had no comment. (The SEC does permit the dissemination of last-sale data in real time for OTC trades of unregistered domestic securities.) This is the second time Pink Sheets has asked the SEC to remove the ban on real-time trade reports in OTC ADRs. In 2005, it made a similar request, but got nowhere. This time as before, it has the support of the STA, which also sent a letter to the SEC. Pink Sheets also has the support of TD Ameritrade whose retail customers account for a big chunk of OTC trading. Pink Sheets' quest is not completely altruistic. Any increase in transparency in these names is bound to improve the fortunes of the Pink Sheets and the dealers that trade the stocks, Coulson acknowledges. "More transparency makes investors happier," he says. "So if there is more transparency, investors will be more willing to trade." Market makers have been required to report OTC trades to FINRA's Automated Confirmation Transaction (ACT) service since 1993. FINRA began disseminating real-time reports of trades of domestic OTC equities in 1994. But it has never disseminated real-time last-sale reports for OTC ADRs. FINRA has always maintained it can't disseminate the data (from which it earns revenues) because of SEC concerns over trading unregistered foreign securities. Most OTC ADRs are unregistered, meaning the firms have not filed certain legal and financial documents with the U.S. government. The SEC has stated in the past that it is worried that too much transparency could lead investors to trade these securities and get into trouble. When FINRA's OTC Bulletin Board launched in 1990, the SEC did not allow market makers to update their ADR quotes in real time. It permitted only two updates a day, rendering the prices mere indications of interest. And in 1997, the NASD, under SEC pressure, banned all quotations in OTC ADRs traded on the OTCBB market. "The NASD is concerned that where there is no public information available regarding a security," the NASD said at the time, "the broad-based automated display of quotations in that security creates an unjustified perception of reliability." Today, very few ADRs are listed on the OTCBB, having long ago fallen to the Pink Sheets. There, the quotes are firm and disseminated in real time. Most ADRs that are registered with the federal government trade on the New York and Nasdaq stock exchanges. (c) 2007 Traders Magazine and SourceMedia, Inc. All Rights Reserved. tradersmagazine.com sourcemedia.com Private Re