Commentary

Richard Repetto
Traders Magazine Online News

Why Do Exchanges Own Multiple Licenses? It's Not Hard To See, Look at the SEC

In this recent research note, Sandler O'Neill + Partners, L.P. Principal Richard Repetto examines why the public exchange operators hold multiple licenses and that rationale behind this phenomenon.

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November 1, 1998

NASD Clarifies SEC's Limit-Order Display Rule

By Staff Reports

The National Association of Securities Dealers has clarified the application of the limit-order display rule, which was introduced when the Securities and Exchange Commission rolled out its order handling rules.

In a notice to members, the NASD said limit-order protection for orders up to 10,000 shares will not apply during a period when the market is not "normal."

The SEC has stated that orders need not be displayed immediately under abnormal conditions, such as the reopening of trading after a trading halt, and the commencement of trading in an initial public offering.

Legal sources quoted in a published report said that in general, an NASD market-making firm that accepts and holds an unfilled limit order from its customer for its own account would be viewed as contravening the limit-order rule if the order is not quickly executed.

The clarification was welcomed by firms active in the IPO market, who previously expressed confusion on how the limit-order display rule should be applied at the start of trading in new offerings.