What is a Reg NMS stock?

What Is Regulation NMS? Regulation National Market System (NMS) is a set of rules passed in 2005 by the Securities and Exchange Commission (SEC) that sought to refine how all listed U.S. stocks are traded.

What is the order protection rule?

What Is the Order Protection Rule? The Order Protection Rule is one of the four main provisions of the Regulation National Market System (NMS). The rule is meant to ensure that investors receive an execution price that is equivalent to what is being quoted on any other exchange where the security is traded.

How many Reg NMS securities are there?

There are 14 separate “rules” that makeup Reg NMS (see Table 1 below), which are grouped into six main categories with some common themes: Definitions: Rule 600 defines concepts and terms, which is sometimes pivotal to how the later rules work.

What is Nasdaq NMS?

National Market System (NMS) Refers to over-the-counter trading. System of trading OTC stocks under the sponsorship of the NASD. Must meet certain criteria for size, profitability and trading activity.

Who needs an LTID?

The SEC has enacted a “large trader” reporting rule requiring both foreign and domestic persons or entities employing such persons, including investment advisers, to register with the SEC via Form 13H and obtain a Large Trader Identification Number (LTID) if you are a “Large Trader” as defined by the rule.

What is limit order protection?

The customer’s limit order must be protected when the member firm executes a trade at a reportable price that is the same as, or is inferior to, the limit order price, that is, when the firm buys at a price lower than a buy limit order it holds, or sells at a price higher than a sell limit order it holds.

Why did the SEC introduce Reg NMS in 2005?

Established in 2005, its aim was to foster both “competition among individual markets and competition among individual orders” in order to promote efficient and fair price formation across securities markets.

What is Regulation NMS 611?

Rule 611 is one of twelve rules that, along with a definitional rule (Rule 600), collectively made up Regulation NMS as originally adopted. Although Regulation NMS was adopted in 2005, most of its twelve rules pre-existed Regulation NMS.

What is Regulation NMS under the Exchange Act?

Regulation NMS To simplify the structure of the rules adopted under Section 11A of the Exchange Act (“NMS rules”), the rules adopted today will designate the NMS rules as Regulation NMS, renumber the NMS rules, and establish a new definitional rule, Rule 600 (“NMS Security Designation and Definitions”).

What is Rule 611 of the Securities Act?

344 The protection against trade-throughs required of trading centers by Rule 611 undergirds the broker-dealer’s duty of best execution, by helping ensure that customer orders are not executed at prices inferior to the best protected quotations.

What is the sub-penny rule under Regulation NMS?

The Sub-Penny Rule (adopted Rule 612 under Regulation NMS) prohibits market participants from displaying, ranking, or accepting quotations in NMS stocks that are priced in an increment of less than $0.01, unless the price of the quotation is less than $1.00. If the price of the quotation is less than $1.00, the minimum increment is $0.0001.