Market Making and Quoting Activities
Chapters in this video
- 0:00 The designated percentage band and stub quotes
- 2:04 Continuous quotations and normal business hours
- 2:51 Excused absences versus unexcused withdrawals
- 4:00 Voluntary termination and the 20-business-day bar
- 4:59 Passive market making under Regulation M
- 6:21 The payments-for-market-making prohibition
- 7:35 Rapid-fire exam recap
What this video covers
- Why a two-sided continuous quotation must be priced within the Designated Percentage of the NBBO, and what makes a stub quote a violation
- How intermittent quoting violates the continuous-quotation requirement even when a market maker is properly registered
- The difference between an excused absence and an unexcused withdrawal, and why trading losses never qualify as excused
- Why the 20-business-day re-registration bar attaches only to voluntary termination of registration, not to temporary quote withdrawal
- What passive market making allows during a Regulation M (Reg M) restricted period: matching but never exceeding the highest independent bid
- How the daily net purchase cap for passive market making is calculated as the greater of 30% of average daily trading volume (ADTV) or 200 shares
- The absolute prohibition on payments for market making, including cash, warrants, free office space, or indirect payments through promoters or affiliates
Read the full lesson, free
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