series 24 - Chap 10 - NASDAQ &
MARKET MAKING, NYSE MARKET &
DESIGNATED MARKET MAKER
to be a market maker in a nasdaq security the BD must maintain a file of... -
correct answer ✔1. current information about the compnay - latest annual
report and prospectus
2. have reason to believe the companys filings with SEC are current
- SEC / Finra approval is not required for someone to make a market in a
particular ecurity
Market makers in NMS securities must publish reports of statistical
information with regard to execution quality at least ... - correct answer
✔Monthly ,
Reg. NMS requires that the order execution disclosure of market makers,
which includes statistical information regarding execution quality, be published
monthly.
Registration as a NASDAQ market maker effectiveness - correct answer ✔1.
is effective the next day
2. quot emus tbe entered within 5 business days and if not entred will need to
re register
- Registration requires firm, two sided continuous quotations during the hours
of 930 - 4pm m-f ET
Primary Market Maker ( PMM) - correct answer ✔1.any registered MM in a
NASDAQ National Market ( NMS ( NNM) security is considerd a primary
market maker
2.PMM add liquidy to the makt
3. PMM does NOT apply to NASDAQ small cap or OTC bulliten boards
,4.PMM performance reviewed by FINRA - MONTHLY
NASDAQ International market - correct answer ✔nasdaq international
market refers to market sessions from 330 am - 9am ET
-aka European sesion and includes
1.NASDAQ/ nms secutiry
2. any non - canadian foreign security included in nasdaq
3.any equity listed on a nationa lsecurities exchanges
-does not include all forighn securities and /or ADRS trade in the US
-Withdrawal of Quotes - NASDAQ - correct answer ✔two types - excused
( temporary) and unexcused ( subject to 20 business day penalty per bid
before re registration is allowed)
-excused withdrawal does not include: market volatility, pending news, influx
of orders, price changes
backing away - correct answer ✔the failure of a market maker to make good
ona bid for the minimum quantity in a security that the market maker is
quoting firm
NASDAQ Quotation levels - correct answer ✔level1 - available to public,
gives the 'inside quote or inside market' for each security. ( NBBO) highest bid
and lowest ask ( subject) ( all level 1 subject quotes)
level2 - use by OTC traders , identifies all makret makers , is party of single
book ( aka old supermontage) ( firm quotes)
level3 - used by NASDAQ market makers and allows them to enter bi/ask
quotations/sizes for the securities they make markets in ( FIRM)
interpositioning - correct answer ✔a member firm may interject a third party
between itself and the best available market in ay transaction with or for a
, customer or a customer of another member IF all the following have ben
considered:
1.character of the market for the security
2. the size and type of transaction
3. the number of makrets checked
4.accessibility of the quote
5. terms and coniditons of the order
- price remains crutial but can change without restrictions - FINRA allows
flexibility here
introducing brokers review of clearing broker when not responsible for clearing
must review clearing broker regarding executions at a period of... - correct
answer ✔IB who give up all of their customer order executinos to its clearing
firm are required to conduct periodical reuglar and rigorous reivew of
executions , but wouldNOT be required to get annual certifications from
clearin firm or to obtain monthly statments with regard to executions.
Member firm reporting obligations - Reg NMS requires that NASDAQ market
makers - - correct answer ✔1.report volume daily in each authorized issue
2. file reports monthly with regard to execution qualifty
3.disclose order routing info. SEC rule 606 of reg NMS requires that BDs
publish Quarterly their order routing info of non-directed orders for equities
and options, and the indentity of the market centeres to which they route the
significant percentage of their orders.
-exception: a. equity options orders with market value of 50k+ and b.equity
securities ordershaving a market value of atleast 200k
Markups and Markdowns reference point - correct answer ✔MMs must base
thier percentage mark up ( on a buy ) and markdown ( on a sell) on the
INSIDE MARKET, the highest bid and the lowest ask of all market makers, not
from the BDs quote ( monitored by FINRA )
MARKET MAKING, NYSE MARKET &
DESIGNATED MARKET MAKER
to be a market maker in a nasdaq security the BD must maintain a file of... -
correct answer ✔1. current information about the compnay - latest annual
report and prospectus
2. have reason to believe the companys filings with SEC are current
- SEC / Finra approval is not required for someone to make a market in a
particular ecurity
Market makers in NMS securities must publish reports of statistical
information with regard to execution quality at least ... - correct answer
✔Monthly ,
Reg. NMS requires that the order execution disclosure of market makers,
which includes statistical information regarding execution quality, be published
monthly.
Registration as a NASDAQ market maker effectiveness - correct answer ✔1.
is effective the next day
2. quot emus tbe entered within 5 business days and if not entred will need to
re register
- Registration requires firm, two sided continuous quotations during the hours
of 930 - 4pm m-f ET
Primary Market Maker ( PMM) - correct answer ✔1.any registered MM in a
NASDAQ National Market ( NMS ( NNM) security is considerd a primary
market maker
2.PMM add liquidy to the makt
3. PMM does NOT apply to NASDAQ small cap or OTC bulliten boards
,4.PMM performance reviewed by FINRA - MONTHLY
NASDAQ International market - correct answer ✔nasdaq international
market refers to market sessions from 330 am - 9am ET
-aka European sesion and includes
1.NASDAQ/ nms secutiry
2. any non - canadian foreign security included in nasdaq
3.any equity listed on a nationa lsecurities exchanges
-does not include all forighn securities and /or ADRS trade in the US
-Withdrawal of Quotes - NASDAQ - correct answer ✔two types - excused
( temporary) and unexcused ( subject to 20 business day penalty per bid
before re registration is allowed)
-excused withdrawal does not include: market volatility, pending news, influx
of orders, price changes
backing away - correct answer ✔the failure of a market maker to make good
ona bid for the minimum quantity in a security that the market maker is
quoting firm
NASDAQ Quotation levels - correct answer ✔level1 - available to public,
gives the 'inside quote or inside market' for each security. ( NBBO) highest bid
and lowest ask ( subject) ( all level 1 subject quotes)
level2 - use by OTC traders , identifies all makret makers , is party of single
book ( aka old supermontage) ( firm quotes)
level3 - used by NASDAQ market makers and allows them to enter bi/ask
quotations/sizes for the securities they make markets in ( FIRM)
interpositioning - correct answer ✔a member firm may interject a third party
between itself and the best available market in ay transaction with or for a
, customer or a customer of another member IF all the following have ben
considered:
1.character of the market for the security
2. the size and type of transaction
3. the number of makrets checked
4.accessibility of the quote
5. terms and coniditons of the order
- price remains crutial but can change without restrictions - FINRA allows
flexibility here
introducing brokers review of clearing broker when not responsible for clearing
must review clearing broker regarding executions at a period of... - correct
answer ✔IB who give up all of their customer order executinos to its clearing
firm are required to conduct periodical reuglar and rigorous reivew of
executions , but wouldNOT be required to get annual certifications from
clearin firm or to obtain monthly statments with regard to executions.
Member firm reporting obligations - Reg NMS requires that NASDAQ market
makers - - correct answer ✔1.report volume daily in each authorized issue
2. file reports monthly with regard to execution qualifty
3.disclose order routing info. SEC rule 606 of reg NMS requires that BDs
publish Quarterly their order routing info of non-directed orders for equities
and options, and the indentity of the market centeres to which they route the
significant percentage of their orders.
-exception: a. equity options orders with market value of 50k+ and b.equity
securities ordershaving a market value of atleast 200k
Markups and Markdowns reference point - correct answer ✔MMs must base
thier percentage mark up ( on a buy ) and markdown ( on a sell) on the
INSIDE MARKET, the highest bid and the lowest ask of all market makers, not
from the BDs quote ( monitored by FINRA )
