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  • 6400. QUOTING AND TRADING IN OTC EQUITY SECURITIES

    • 6410. General

      This Rule 6400 Series sets forth quotation and trading requirements for "OTC Equity Securities" as that term is defined in Rule 6420.
      Members shall use the OTC Reporting Facility for trade reporting in OTC Equity Securities and Restricted Equity Securities in compliance with the Rule 6600 and 7300 Series, as well as all other applicable rules and regulations.
      Amended by SR-FINRA-2010-003 eff. June 28, 2010.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2005-087 eff. Aug. 1, 2006.
      Amended by SR-NASD-2004-076 eff. May 5, 2004.
      Amended by SR-NASD-2000-42 eff. June 27, 2003.

      Selected Notices: 03-28, 08-57, 10-26.

    • 6420. Definitions

      (a) Terms used in this Rule shall have the same meaning as those defined in the FINRA By-Laws and rules unless otherwise specified herein.
      (b) "Direct participation program" or DPP, means a program which provides for flow-through tax consequences regardless of the structure of the legal entity or vehicle for distribution including, but not limited to, oil and gas programs, real estate programs, agricultural programs, cattle programs, condominium securities, Subchapter S corporate offerings and all other programs of a similar nature, regardless of the industry represented by the program, or any combination thereof. A program may be composed of one or more legal entities or programs but when used herein, the term shall mean each of the separate entities or programs making up the overall program and/or the overall program itself. Excluded from this definition are real estate investment trusts, tax qualified pension and profit sharing plans pursuant to Sections 401 and 403(a) of the Internal Revenue Code and individual retirement plans under Section 408 of that Code, tax sheltered annuities pursuant to the provisions of Section 403(b) of the Internal Revenue Code, and any company, including separate accounts, registered pursuant to the Investment Company Act.
      (c) "Inter-dealer quotation system" shall mean any system of general circulation to brokers or dealers which regularly disseminates quotations of identified brokers or dealers.
      (d) "Non-Market Maker" means a member of FINRA that is not an OTC Market Maker with respect to a particular OTC Equity Security.
      (e) "Normal market hours" means 9:30 a.m. Eastern Time to 4:00 p.m. Eastern Time.
      (f) "OTC Equity Security" means any equity security that is not an "NMS stock" as that term is defined in Rule 600(b)(47) of SEC Regulation NMS; provided, however, that the term "OTC Equity Security" shall not include any Restricted Equity Security.
      (g) "OTC Market Maker" means a member of FINRA that holds itself out as a market maker by entering proprietary quotations or indications of interest for a particular OTC Equity Security in any inter-dealer quotation system, including any system that the SEC has qualified pursuant to Section 17B of the Exchange Act. A member is an OTC Market Maker only in those OTC Equity Securities in which it displays market making interest via an inter-dealer quotation system.
      (h) "Priced entry" shall mean a quotation consisting of a bid, offer, or both at a specified price.
      (i) "Quotation" shall mean any bid or offer at a specified price with respect to an OTC Equity Security, or any indication of interest by a broker or dealer in receiving bids or offers from others for such a security, or any indication by a broker or dealer that it wishes to advertise its general interest in buying or selling a particular non-exchange-listed security.
      (j) "Quotation medium" means any inter-dealer quotation system or any publication or electronic communications network or other device that is used by brokers or dealers to make known to others their interest in transactions in any OTC Equity Security, including offers to buy or sell at a stated price or otherwise, or invitations of offers to buy or sell.
      (k) "Restricted Equity Security" means any equity security that meets the definition of "restricted security" as contained in Securities Act Rule 144(a)(3).
      (l) "Stop Stock Price" means the specified price at which a member and another party agree a Stop Stock Transaction shall be executed, and which price is based upon the prices at which the security is trading at the time the order is received by the member, taking into consideration that the specified price may deviate from the current market prices to factor in the size of the order and the number of shares available at those prices.
      (m) "Stop Stock Transaction" means any transaction that meets both of the following conditions:
      (1) the transaction is the result of an order in which a member and another party agree that the order shall be executed at a Stop Stock Price or better; and
      (2) the order is executed at the Stop Stock Price.
      (n) "OTC Reporting Facility" means the service provided by FINRA that accommodates reporting for trades in OTC Equity Securities executed other than on or through an exchange and for trades in Restricted Equity Securities effected under Securities Act Rule 144A and dissemination of last sale reports. Regarding those OTC Equity Securities and Restricted Equity Securities that are not eligible for clearance and settlement through the facilities of the National Securities Clearing Corporation, the OTC Reporting Facility comparison function will not be available. However, the OTC Reporting Facility will support the entry and dissemination, as applicable, of last sale data on such securities.
      (o) "OTC Reporting Facility Participant" means any member of FINRA in good standing that uses the OTC Reporting Facility.
      Amended by SR-FINRA-2012-027 eff. July 9, 2012.
      Amended by SR-FINRA-2010-060 eff. Dec. 15, 2010.
      Amended by SR-FINRA-2010-051 eff. Nov. 1, 2010.
      Amended by SR-FINRA-2009-061 eff. Nov. 1, 2010.
      Amended by SR-FINRA-2010-003 eff. June 28, 2010.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Amended by SR-NASD-2005-087 eff. Aug. 1, 2006.
      Amended by SR-NASD-2004-151 eff. Oct. 12, 2004.
      Amended by SR-NASD-2004-076 eff. May 5, 2004.

      Selected Notice: 08-57, 10-24, 10-26.

    • 6430. OTC Equity Quotation Requirements

      • 6431. Recording of Quotation Information

        (a) Quotation Recording Requirements
        (1) Subject to the terms and conditions contained herein, each OTC Market Maker that displays priced quotations (bid and/or offer) or unpriced indications of interest in OTC Equity Securities in an inter-dealer quotation system that permits quotation updates on a real-time basis shall record each item of information described in paragraph (b) of this Rule. This quote activity record must reflect all changes in an OTC Market Maker's priced quotation or quotation size displayed or unpriced indication of interest, and the time any such change was effected.
        (2) Members shall record each item of information required to be recorded under this Rule in such form as is prescribed by FINRA from time to time.
        (3) Maintaining and Preserving Records
        (A) Each member shall maintain and preserve records of the information required to be recorded under this Rule for the period of time and accessibility specified in SEA Rule 17a-4(a).
        (B) The records required to be maintained and preserved under this Rule may be immediately produced or reproduced on "micrographic media" as defined in SEA Rule 17a-4(f)(1)(i) or by means of "electronic storage media" as defined in SEA Rule 17a-4(f)(1)(ii) that meet the conditions set forth in SEA Rule 17a-4(f) and may be maintained and preserved for the required time in that form.
        (b) Information to be Recorded
        The quotation activity record required pursuant to paragraph (a) of this Rule shall contain, at a minimum, the following information for every priced quotation (bid and/or offer) or unpriced indication of interest displayed by the member during the trading day:
        (1) Submitting firm;
        (2) Inter-dealer quotation system or medium;
        (3) Trade date;
        (4) Time quotation displayed (expressed in hours, minutes and seconds);
        (5) Security name and symbol;
        (6) Bid and bid quotation size (if applicable);
        (7) Offer and offer quotation size (if applicable);
        (8) Prevailing Inside Bid; and
        (9) Prevailing Inside Offer
        If no updates were entered to an OTC Market Maker's quotation or quotation size for any given trading day, the member must record the information in subparagraphs (b)(1) through (7).
        (c) Quotations Not Required To Be Recorded
        The recording requirements contained in paragraphs (a) and (b) of this Rule shall not apply to quotations of OTC Equity Securities that are displayed on an inter-dealer quotation system that is:
        (1) operated by a registered securities association or a national securities exchange; or
        (2) operated by a member of FINRA.
        (d) Reporting Requirements
        (1) General Requirement
        Members shall report information required to be recorded under this Rule to FINRA upon its request.
        (2) Method of Transmitting Data
        Members shall transmit this information in such form prescribed by FINRA.
        (e) Reporting Agent Agreements
        (1) "Reporting Agent" shall mean a third party that enters into any agreement with a member pursuant to which such third party agrees to fulfill such member's obligations under this Rule.
        (2) Any member may enter into an agreement with a Reporting Agent pursuant to which the Reporting Agent agrees to fulfill the obligations of such member under this Rule. Any such agreement shall be evidenced in writing, which shall specify the respective functions and responsibilities of each party to the agreement that are required to effect full compliance with the requirements of this Rule.
        (3) All written documents evidencing an agreement described in paragraph (e)(2) shall be maintained by each party to the agreement.
        (4) Each member remains responsible for compliance with the requirements of this Rule, notwithstanding the existence of an agreement described in this paragraph.
        (f) Withdrawal of Quotations or Unpriced Indications of Interest
        If a member knows or has reason to believe that it or its Reporting Agent is not complying with the requirements of this Rule, the member must withdraw its quotations or unpriced indications of interest until such time that the member is satisfied that its quotation data is being properly recorded and reported.
        Amended by SR-FINRA-2009-054 eff. Feb. 11, 2011.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Adopted by SR-NASD-2000-42 eff. June 27, 2003.

        Selected Notices: 03-28, 08-57, 10-42.

      • 6432. Compliance with the Information Requirements of SEA Rule 15c2-11

        (a) Except as provided in SEA Rules 15c2-11(f)(1), (2), (3) and (5) and 15c2-11(h), no member shall initiate or resume the quotation of a non-exchange-listed security in any quotation medium unless the member has demonstrated compliance with this Rule and the applicable requirements for information maintenance under SEA Rule 15c2-11. A member shall demonstrate compliance by making a filing with, and in the form required by, FINRA, which filing must be received at least three business days before the member's quotation is published or displayed in the quotation medium.
        (b) The information to be filed shall contain:
        (1) One copy of all information required to be maintained under SEA Rule 15c2-11(a)(1), (2), (3), (4), or (5), including any information that may be required by future amendments thereto. Members are not required to file with FINRA copies of any information that is available through the SEC's Electronic Data Gathering, Analysis, and Retrieval ("EDGAR") system; provided, however, that the filing with FINRA shall contain identifying information for each issuer report or statement available through EDGAR that was relied upon in satisfying the member's obligations under this Rule and SEA Rule 15c2-11(a), including the type of report, report date and any other information as may be requested by FINRA.
        (2) Identification of the issuer, the issuer's predecessor in the event of a merger or reorganization within the previous 12 months, the type of non-exchange-listed security to be quoted (e.g., ADR, warrant, unit, or common stock), the quotation medium to be used, the member's initial or resumed quotation, and the particular subsection of SEA Rule 15c2-11 with which the member is demonstrating compliance.
        (3) If a member is initiating or resuming quotation of a non-exchange-listed security with a priced entry, the basis upon which that priced entry was determined and the factors considered in making that determination.
        (4) A certification that neither the member nor persons associated with the member have accepted or will accept any payment or other consideration prohibited by FINRA Rule 5250.
        (c) If a member's initial or resumed quotation does not include a priced entry, a member shall supplement its prior filing under this Rule, in the form required by FINRA, before inserting a priced entry for the affected non-exchange-listed security in a quotation medium. The supplemental filing shall specify the basis upon which the proposed priced entry was determined and the factors considered in making that determination. The supplemental filing must be received by FINRA at least three business days before the member's priced entry first appears in a quotation medium.
        (d) All filings made with FINRA under this Rule must be reviewed and signed by a principal of the member firm.
        (e) For purposes of this Rule, the term "non-exchange-listed security" means any equity security, other than a Restricted Equity Security, that is not traded on any national securities exchange.

        • • • Supplementary Material: --------------

        01. Any member initiating or resuming quotations in reliance on the exception provided by SEA Rule 15c2-11(f)(2) must be able to demonstrate eligibility for the exception by making a contemporaneous record of:

        (a) the identification of each associated person who receives the unsolicited customer order or indication of interest directly from the customer, if applicable;
        (b) the identity of the customer;
        (c) the date and time the unsolicited customer order or indication of interest was received; and
        (d) the terms of the unsolicited customer order or indication of interest that is the subject of the quotation (e.g., security name and symbol, size, side of the market, duration (if specified) and, if priced, the price).

        Any member displaying a quote representing an unsolicited customer order or indication of interest that was received from another broker-dealer must contemporaneously record the identity of the person from whom information regarding the unsolicited customer order or indication of interest was received, if applicable; the date and time the unsolicited customer order or indication of interest was received by the member displaying the quotation; and the terms of the order that is the subject of the quotation.

        Amended by SR-FINRA-2014-011 eff. July 7, 2014.
        Amended by SR-FINRA-2009-054 eff. Feb. 11, 2011.
        Amended by SR-FINRA-2010-047 eff. Oct. 15, 2010.
        Amended by SR-FINRA-2010-003 eff. June 28, 2010.
        Amended by SR-FINRA-2009-030 eff. Sep. 21, 2009.
        Amended by SR-FINRA-2008-057 eff. Dec. 15, 2008.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Amended by SR-NASD-2006-087 eff. Aug. 1, 2006.
        Renumbered from Rule 6740 and amended by SR-NASD-2005-087 eff. Aug 1, 2006.
        Amended by SR-NASD-2005-098 eff. June 29, 2006.
        Adopted by SR-NASD-90-2 eff. May 1, 1990.

        Selected Notices: 90-40, 92-50, 06-27, 08-57, 09-51, 10-26, 10-42, 14-26, 17-26.

      • 6433. Minimum Quotation Size Requirements For OTC Equity Securities

        Every member entering quotations in any inter-dealer quotation system that permits quotation updates on a real-time basis must enter and honor those quotations for at least the minimum size defined in the table below. In this regard, it is the member's responsibility to determine the minimum size requirement applicable to its quotation. Depending on the price level of the quotation, a different minimum size can apply to each side of the market being quoted by the member in a given security.
        Price (Bid or Offer) Minimum Quote Size
        0.0001–0.0999 10,000
        0.10-0.1999 5,000
        0.20–0.5099 2,500
        0.51–0.9999 1,000
        1.00–174.99 100
        175.00+ 1

        Amended by SR-FINRA-2018-015 eff. July 31, 2018.
        Amended by SR-FINRA-2018-022 eff. June 7, 2018.
        Amended by SR-FINRA-2017-035 eff. Dec. 8, 2017.
        Amended by SR-FINRA-2017-014 eff. June 9, 2017.
        Amended by SR-FINRA-2016-044 eff. Dec. 9, 2016.
        Amended by SR-FINRA-2016-016 eff. June 10, 2016.
        Amended by SR-FINRA-2015-051 eff. Dec. 11, 2015.
        Amended by SR-FINRA-2015-028 eff. Aug. 14, 2015.
        Amended by SR-FINRA-2015-010 eff. May 15, 2015.
        Amended by SR-FINRA-2015-002 eff. Jan. 29, 2015.
        Amended by SR-FINRA-2014-041 eff. Sept. 30, 2014.
        Amended by SR-FINRA-2013-049 eff. Nov. 5, 2013.
        Amended by SR-FINRA-2011-058 eff. Nov. 12, 2012.
        Amended by SR-FINRA-2009-054 eff. Feb. 11, 2011.
        Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
        Renumbered from Rule 6750 and amended by SR-NASD-2005-087 eff. Aug. 1, 2006.
        Amended by SR-NASD-2000-17 eff. September 5, 2000.
        Amended by SR-NASD-99-32 eff. September 23, 1999.
        Adopted by SR-NASD-93-17 eff. Sept. 8, 1993.

        Selected Notices: 93-54, 08-57, 10-42, 12-37, 12-51.

      • 6434. Minimum Pricing Increment for OTC Equity Securities

        (a) No member shall display, rank, or accept a bid or offer, an order, or an indication of interest in any OTC Equity Security priced in an increment smaller than $0.01 if that bid or offer, order or indication of interest is priced equal to or greater than $1.00 per share.
        (b) No member shall display, rank, or accept a bid or offer, an order, or an indication of interest in any OTC Equity Security priced in an increment smaller than $0.0001 if that bid or offer, order or indication of interest is priced less than $1.00 per share except, where an order or indication of interest is priced less than $0.0001, a member may rank or accept (but not display) such order or indication of interest in an increment of $0.000001 or greater.
        Adopted by SR-FINRA-2009-054 eff. Feb. 11, 2011.

        Selected Notice: 10-42.

      • 6435. Withdrawal of Quotations in an OTC Equity Security in Compliance with SEC Regulation M

        (a) A member that is a distribution participant, affiliated purchaser, selling security holder or issuer in a distribution of an OTC Equity Security that is a covered security subject to Rule 101 or 102 of SEC Regulation M and is entering quotations in such security shall, unless another member has assumed responsibility in writing for compliance with this Rule:
        (1) withdraw all quotations in the OTC Equity Security to comply with the applicable restricted period under Rule 101 or 102 of SEC Regulation M; and
        (2) not enter a stabilizing bid for the OTC Equity Security pursuant to Rule 104 of SEC Regulation M.
        (b) For purposes of this Rule, the following terms shall have the meanings as defined in Rule 100 of SEC Regulation M: "affiliated purchaser," "covered security," "distribution," "distribution participant," "restricted period," "selling security holder," and "stabilizing."
        Amended by SR-FINRA-2009-054 eff. Feb. 11, 2011.
        Adopted by SR-FINRA-2008-039.

        Selected Notices: 08-57, 08-74, 10-42.

      • 6437. Prohibition from Locking or Crossing Quotations in OTC Equity Securities

        (a) Members must implement policies and procedures that reasonably avoid displaying, or engaging in a pattern or practice of displaying, locking or crossing quotations in any OTC Equity Security.
        (b) For purposes of this Rule, the following definitions shall apply:
        (1) The term "crossing quotation" shall mean the display of a bid for an OTC Equity Security at a price that is higher than the displayed price of an offer for such OTC Equity Security in the same inter-dealer quotation system, or the display of an offer for an OTC Equity Security at a price that is lower than the displayed price of a bid for such OTC Equity Security in the same inter-dealer quotation system.
        (2) The term "locking quotation" shall mean the display of a bid for an OTC Equity Security at a price that equals the displayed price of an offer for such OTC Equity Security in the same inter-dealer quotation system, or the display of an offer for an OTC Equity Security at a price that equals the displayed price of a bid for such OTC Equity Security in the same inter-dealer quotation system.
        Adopted by SR-FINRA-2009-054 eff. Feb. 11, 2011.

        Selected Notice: 10-42.

      • 6438. Displaying Priced Quotations in Multiple Quotation Mediums

        Members that display priced quotations on a real-time basis for an OTC Equity Security in two or more quotation mediums that permit quotation updates on a real-time basis must display the same priced quotations for the security in each medium, except with respect to a price quotation that represents a customer limit order displayed on an electronic communications network in conformance with the exception to Rule 6460 provided in paragraph (b)(5) of that rule.

        Adopted by SR-FINRA-2011-052 eff. May 31, 2012.

        Selected Notice: 12-13.

    • 6440. Trading and Quotation Halt in OTC Equity Securities

      (a) Authority for Initiating a Trading and Quotation Halt
      In circumstances in which it is necessary to protect investors and the public interest, FINRA may direct members, pursuant to the procedures set forth in paragraph (b), to halt trading and quotations in OTC Equity Securities (as such term is defined in Rule 6420) if:
      (1) the OTC Equity Security or the security underlying an American Depository Receipt ("ADR") that is an OTC Equity Security ("OTC ADR") is listed on or registered with a foreign securities exchange or market, and the foreign securities exchange, market, or regulatory authority overseeing such issuer, exchange, or market, halts trading in such security for regulatory reasons because of public interest concerns or for news pending; provided, however, that FINRA will not impose a trading and quotation halt if the Foreign Regulatory Halt was imposed solely for a regulatory filing deficiency, or operational reasons ("Foreign Regulatory Halt");
      (2) the OTC Equity Security or the security underlying an OTC ADR is a derivative or component of a security listed on or registered with a national securities exchange or foreign securities exchange or market ("listed security") and the national securities exchange, or foreign securities exchange or market imposes a trading halt in the listed security ("Derivative Halt"); or
      (3) FINRA determines that an extraordinary event has occurred or is ongoing that has had a material effect on the market for the OTC Equity Security or the security underlying an OTC ADR or has caused or has the potential to cause major disruption to the marketplace or significant uncertainty in the settlement and clearance process ("Extraordinary Event Halt").
      (b) Procedure for Initiating a Trading and Quotation Halt
      (1) Upon notice of a Foreign Regulatory Halt or Derivative Halt from: (A) the national or foreign securities exchange or market on which the OTC Equity Security or the security underlying the OTC ADR is listed or registered, (B) a regulatory authority overseeing such issuer, exchange, or market, or (C) another reliable third-party source where FINRA can validate the information provided, FINRA will promptly initiate a trading and quotation halt in the OTC Equity Security. The commencement of the trading and quotation halt for the OTC Equity Security will be effective simultaneous with the issuance of appropriate public notice by FINRA.
      (2) After FINRA initiates a halt in an OTC Equity Security as a result of a Foreign Regulatory Halt or a Derivative Halt, FINRA may continue the halt in trading and quoting in the OTC market for the OTC Equity Security until such time as FINRA receives notice that the applicable regulatory authority has or intends to resume trading in the security.
      (3) After FINRA initiates a halt in an OTC Equity Security as a result of an Extraordinary Event Halt, trading and quotations in the OTC market for the OTC Equity Security may resume when FINRA determines that the basis for the halt no longer exists, or when ten business days have elapsed from the date FINRA initiated the trading and quotation halt in the security, whichever occurs first.
      (4) FINRA shall disseminate appropriate public notice that a trading and quotation halt initiated under this Rule is no longer in effect.
      (c) Violation of OTC Trading and Quotation Halt Rule
      If a security is subject to a trading and quotation halt initiated pursuant to this Rule, it shall be deemed conduct inconsistent with just and equitable principles of trade and a violation of Rule 2010 for a member:
      (1) to effect, directly or indirectly, a trade in such security; or
      (2) to publish a quotation, a priced bid and/or offer, an unpriced indication of interest (including "bid wanted" and "offer wanted" indications), or a bid or offer accompanied by a modifier to reflect unsolicited customer interest, in any quotation medium. For purposes of this Rule, "quotation medium" shall mean any: system of general circulation to brokers or dealers that regularly disseminates quotations of identified brokers or dealers; or publication, alternative trading system or other device that is used by brokers or dealers to disseminate quotations to others.

      • • • Supplementary Material: --------------

      .01 Discretion for Extraordinary Event Halts. FINRA may impose a trading and quotation halt in an OTC Equity Security pursuant to Rule 6440(a)(3) where FINRA determines, in its discretion, based on the facts and circumstances of the particular event, that halting trading in the security is the appropriate mechanism to protect investors and ensure a fair and orderly marketplace. As a general matter, FINRA does not favor imposing a trading and quotation halt in an OTC Equity Security and will exercise this authority in very limited circumstances. FINRA may also determine to extend an Extraordinary Event Halt that has been initiated pursuant to Rule 6440 (a)(3) to continue in effect for subsequent periods of up to 10 business days each if, at the time of any such extension, FINRA finds that the extraordinary event is ongoing and determines that the continuation of the halt beyond the prior 10 business day period is necessary in the public interest and for the protection of investors.

      .02 Factors Considered. In determining whether to impose an Extraordinary Event Halt under Rule 6440(a)(3), FINRA will consider several factors in making its determination, including but not limited to: (1) the material nature of the event; (2) the material facts surrounding the event are undisputed and not in conflict; (3) the event has caused widespread confusion in the trading of the security; (4) there has been a material negative effect on the market for the subject security; (5) the potential exists for a major disruption to the marketplace; (6) there is significant uncertainty in the settlement and clearance process for the security; and/or (7) such other factors as FINRA deems relevant in making its determination. FINRA may review all or some of these factors as it determines appropriate.

      .03 Market-wide Circuit Breaker in OTC Equity Securities. In the event FINRA has halted trading otherwise than on an exchange in all NMS stocks pursuant to Rule 6121, FINRA also shall halt trading in all OTC Equity Securities until such time that the market-wide circuit breaker no longer is in effect for NMS stocks. Members must halt quoting and trading in all OTC Equity Securities as of the time the market-wide trading halt in NMS stocks is publicly disseminated.

      Amended by SR-FINRA-2012-010 eff. May 9, 2013.
      Amended by SR-FINRA-2011-054 eff. Feb 4, 2013.
      Amended by SR-FINRA-2009-054 eff. Feb. 11, 2011.
      Amended by SR-FINRA-2008-057 eff. Dec. 15, 2008.
      Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
      Renumbered from Rule 6545 and amended by SR-NASD-2006-039 eff. March 16, 2007.
      Amended by SR-NASD-2005-089 eff. Oct. 1, 2005.
      Adopted by SR-NASD-99-33 eff. June 26, 2000.

      Selected Notice: 00-41, 07-09, 07-22, 08-57, 10-42, 13-13.

    • 6450. Restrictions on Access Fees

      A member shall not impose, nor permit to be imposed, non-subscriber access or post-transaction fees against its published quotation in any OTC Equity Security that exceed or accumulate to more than:
      (a) $0.003 per share, if the published quotation is priced equal to or greater than $1.00; or
      (b) the lesser of 0.3% of the published quotation price on a per share basis or 30% of the minimum pricing increment under Rule 6434 relevant to the display of the quotation on a per share basis if the published quotation is less than $1.00.
      Adopted by SR-FINRA-2009-054 eff. Feb. 11, 2011.

      Selected Notice: 10-42.

    • 6460. Display of Customer Limit Orders

      (a) Each OTC Market Maker displaying a priced quotation in any OTC Equity Security in an inter-dealer quotation system shall publish immediately a bid or offer that reflects:
      (1) The price and the full size of each customer limit order held by the OTC Market Maker that is at a price that would improve the bid or offer of such OTC Market Maker in such security; and
      (2) The full size of each customer limit order held by the OTC Market Maker that:
      (A) Is priced equal to the bid or offer of such OTC Market Maker for such security;
      (B) Is priced equal to the best bid or best offer of the inter-dealer quotation system in which the OTC Market Maker is quoting; and
      (C) Represents more than a de minimis change in relation to the size associated with the OTC Market Maker's bid or offer.
      (b) The requirements in paragraph (a) of this Rule shall not apply to any customer limit order:
      (1) That is executed upon receipt of the order.
      (2) That is placed by a customer who expressly requests, either at the time that the order is placed or prior thereto pursuant to an individually negotiated agreement with respect to such customer's orders, that the order not be displayed.
      (3) That is an odd-lot order.
      (4) That is a block size order, unless a customer placing such order requests that the order be displayed.
      (5) That is delivered immediately upon receipt to a national securities exchange or an electronic communications network that widely disseminates such order and that complies with paragraph (c) below with respect to that order.
      (6) That is delivered immediately upon receipt to another OTC Market Maker that complies with the requirements of this Rule with respect to that order.
      (7) That is an all-or-none order.
      (8) That is priced less than $0.0001 per share.
      (c) The electronic communications network:
      (1) Provides to a national securities exchange, national securities association or inter-dealer quotation system the prices and sizes of the orders at the highest buy price and the lowest sell price for such security entered in, and widely disseminated by, the electronic communications network; and
      (2) Provides, to any broker or dealer, the ability to effect a transaction with a priced order widely disseminated by the electronic communications network entered therein by an OTC market maker that is:
      (A) Equivalent to the ability of any broker or dealer to effect a transaction with an OTC market maker pursuant to the rules of the applicable national securities exchange, national securities association or inter-dealer quotation system to which the electronic communications network supplies such bids and offers; and
      (B) At the price of the highest priced buy order or lowest priced sell order, or better, for the lesser of the cumulative size of such priced orders entered therein by OTC market makers at such price, or the size of the execution sought by the broker or dealer, for such security.
      (d) Definitions
      For purposes of this Rule, the following definitions shall apply:
      (1) Best bid and best offer mean the highest priced bid and the lowest priced offer.
      (2) Block size with respect to an order means it is of at least 10,000 shares and has a market value of at least $100,000.
      (3) Customer limit order means an order to buy or sell an OTC Equity Security at a specified price that is not for the account of either a broker or dealer; provided, however, that the term customer limit order shall include an order transmitted by a broker or dealer on behalf of a customer.
      Adopted by SR-FINRA-2009-054 eff. May 9, 2011.

      Selected Notice: 10-42.

    • 6480. Multiple MPIDs for Quoting and Trading in OTC Equity Securities

      (a) Any member that is required to obtain, or otherwise wishes to use, more than one Market Participant Symbol ("MPID") for purposes of quoting and trading OTC Equity Securities or for reporting trades to the OTC Reporting Facility must submit a written request, in the form required by FINRA, to, and obtain approval from, FINRA Market Operations for such additional MPID(s).
      (b) A member that posts a quotation in an OTC Equity Security and reports to a FINRA system a trade resulting from such posted quotation must utilize the same MPID for reporting purposes.
      (c) Except as set forth in paragraph (d), an OTC Reporting Facility Participant that operates an alternative trading system ("ATS"), as that term is defined in Rule 300 of SEC Regulation ATS, must obtain a single, separate MPID for each such ATS designated for exclusive use for reporting each ATS's transactions. The member must use such separate MPID to report all transactions executed within the ATS to the OTC Reporting Facility, except if the member is submitting a clearing-only, non-regulatory report pursuant to Rule 7330(h)(4). The member shall not use such separate MPID to report any transaction that is not executed within the ATS. Any member that operates multiple ATSs must obtain a separate MPID for each ATS. Members must have policies and procedures in place to ensure that trades reported with a separate MPID obtained under this paragraph are restricted to trades executed within the ATS.
      (d) An ATS is permitted to use two separate MPIDs only if one MPID is used exclusively for reporting transactions to TRACE and the other MPID is used exclusively for reporting transactions to the equity trade reporting facilities (the Alternative Display Facility, the OTC Reporting Facility, the FINRA/Nasdaq TRF, or the FINRA/NYSE TRF).

      • • • Supplementary Material: --------------

      .01 FINRA considers the issuance of, and trade reporting with, multiple MPIDs to be a privilege and not a right. A member must identify the purpose(s) and system(s) for which the multiple MPIDs will be used. If FINRA determines that the use of multiple MPIDs is detrimental to the marketplace, or that a member is using one or more additional MPIDs improperly or for other than the purpose(s) identified by the member, FINRA staff retains full discretion to limit or withdraw its grant of the additional MPID(s) to such member.

      Amended by SR-FINRA-2015-035 eff. Feb. 1, 2016.
      Amended by SR-FINRA-2014-042 eff. Feb. 2, 2015.
      Amended by SR-FINRA-2014-017 eff. Feb. 2, 2015.
      Amended by SR-FINRA-2013-042 eff. Jan. 17, 2014 and Feb. 2, 2015.
      Amended by SR-FINRA-2013-008 eff. Jan. 25, 2013.
      Amended by SR-FINRA-2011-074 eff. Jan. 27, 2012.
      Amended by SR-FINRA-2011-003 eff. Jan. 28, 2011.
      Amended by SR-FINRA-2009-094 eff. Jan. 29, 2010.
      Adopted by SR-FINRA-2009-051 eff. July 23, 2009.

      Selected Notices: 14-07, 15-51.

    • 6490. Processing of Company-Related Actions

      (a) General
      (1) In furtherance of FINRA's obligations to foster cooperation and coordination of the clearing, settling and processing of transactions in equity and debt securities of any issuer with a class of publicly traded, non-exchange listed, securities in the OTC market and, in general, to protect investors and the public interest, FINRA's Operations Department ("Department") reviews and processes documents related to announcements for SEA Rule 10b-17 Actions and Other Company-Related Actions to facilitate the orderly trading and settlement of OTC securities.
      (2) For purposes of this Rule, the term "SEA Rule 10b-17 Actions" includes, dividends or other distributions in cash or kind, stock splits or reverse stock splits, or rights or other subscription offerings, and such other actions as are provided for in SEA Rule 10b-17; and the term "Other Company-Related Actions" includes, but is not limited to, any issuance or change to a symbol or name, mergers, acquisitions, dissolutions or other company control transactions; and bankruptcy or liquidations.
      (3) This Rule details the advance notification, supporting documentation and fees required by FINRA to process documentation related to such requests.
      (b) Request for FINRA Action
      (1) An issuer or other duly authorized representative of the issuer may request that FINRA process documentation related to an SEA Rule 10b-17 Action or Other Company-Related Action by submitting a signed request in the manner and form required by FINRA ("Requesting Party"). Initial symbol set up requests may also be submitted by members or associated persons of members in order to comply with regulatory reporting requirements.
      (2) All requests to process documentation related to an SEA Rule 10b-17 Action must be complete and submitted to the Department, in the manner and form required, no later than the time frame specified in SEA Rule 10b-17. A Requesting Party that does not submit a completed request to the Department, in the manner and form required, within the time frame specified in SEA Rule 10b-17, shall be deemed "late" and, as set forth in this Rule, subject to an additional fee before the request may be processed. Nothing in the Rule shall alter the obligations of an issuer under SEA Rule 10b-17 and the processing of documentation related to a "late" SEA Rule 10b-17 Action request by FINRA shall not relieve an issuer of any violations under such rule.
      (3) All requests to process documentation related to Other Company-Related Actions must be complete and submitted to the Department, in the manner and form required, no later than the time period prescribed for such Other Company-Related Action by FINRA. Notice and information submitted for Other Company-Related Actions must be submitted no later than 10 calendar days prior to the effective date of the company action. A Requesting Party that does not submit a completed FINRA action form to the Department, in the manner and form prescribed, at least ten (10) calendar days prior to the proposed effective date of the company action, shall be deemed "late" and as set forth in this Rule, subject to an additional fee before being processed.
      (4) The Department may request such additional information or documentation as may be necessary for the Department to review the request to process documentation related to an SEA Rule 10b-17 Action or Other Company-Related Action and verify the accuracy of the information submitted.
      (c) Fees
      The Requesting Party shall pay the following non-refundable fees for the review and processing of documentation related to an SEA Rule 10b-17 Action and Other Company-Related Action:

      SEA Rule 10b-17 Action Fee
      Timely SEA Rule 10b-17
      Notification
      $200
      Late SEA Rule 10b-17 Notification
      Submitted at least 5 calendar days prior
      to Corporate Action Date
      $1,000
      Late SEA Rule 10b-17 Notification
      Submitted at least 1 calendar day prior
      to Corporate Action Date
      $2,000
      Late SEA Rule 10b-17 Notification
      Submitted on or after Corporate Action Date
      $5,000
      Other Company-Related Action Fee
      Voluntary Symbol Request Change $500
      Initial Symbol Set Up No Charge
      Symbol Deletion No Charge
      Appeals Fee
      Action Determination Appeal Fee $4,000
      (d) Procedures for Reviewing Submissions
      (1) Review
      The Department shall review all requests to process documentation related to SEA Rule 10b-17 Actions and Other Company-Related Actions that are submitted pursuant to this Rule, including any additional documents or information requested in accordance with paragraph (b) above. All such requests must be accompanied by proof of payment of the requisite fee when appropriate in accordance with paragraph (c) above.
      (2) Lapsed Requests
      Where a Requesting Party does not, in the reasonable determination of the Department, sufficiently respond to any request by the Department for additional information or documentation pursuant to paragraph (b)(3) above within 90 calendar days following such Department request, such party's request shall be deemed "lapsed" and be closed.
      (3) Deficiency Determination
      In circumstances where an SEA Rule 10b-17 Action or Other Company-Related Action is deemed deficient, the Department may determine that it is necessary for the protection of investors, the public interest and to maintain fair and orderly markets, that documentation related to such SEA Rule 10b-17 Action or Other Company-Related Action will not be processed. In instances where the Department makes such a deficiency determination, the request to process documentation related to the SEA Rule 10b-17 Action or Other Company-Related Action, as applicable, will be closed, subject to paragraphs (d)(4) and (e) of this Rule. The Department shall make such deficiency determinations solely on the basis of one or more of the following factors: (1) FINRA staff reasonably believes the forms and all supporting documentation, in whole or in part, may not be complete, accurate or with proper authority; (2) the issuer is not current in its reporting requirements, if applicable, to the SEC or other regulatory authority; (3) FINRA has actual knowledge that the issuer, associated persons, officers, directors, transfer agent, legal adviser, promoters or other persons connected to the issuer or the SEA Rule 10b-17 Action or Other Company-Related Action are the subject of a pending, adjudicated or settled regulatory action or investigation by a federal, state or foreign regulatory agency, or a self-regulatory organization; or a civil or criminal action related to fraud or securities laws violations; (4) a state, federal or foreign authority or self-regulatory organization has provided information to FINRA, or FINRA otherwise has actual knowledge indicating that the issuer, associated persons, officers, directors, transfer agent, legal adviser, promoters or other persons connected with the issuer or the SEA Rule 10b-17 Action or Other Company-Related Action may be potentially involved in fraudulent activities related to the securities markets and/or pose a threat to public investors; and/or (5) there is significant uncertainty in the settlement and clearance process for the security.
      (4) Notice Regarding Determination
      If the Department determines that a request to process documentation related to a SEA Rule 10b-17 Action or a Other Company-Related Action is deficient, FINRA staff shall provide written notice to the Requesting Party. Any notice issued under this paragraph shall state the specific factor(s) that caused the request to be deemed deficient and the Requesting Party may appeal a determination pursuant to paragraph (e) of this Rule.
      (5) Notice Issuance
      A notice issued under this paragraph shall be issued by facsimile or electronic mail, or pursuant to Rule 9134.
      (e) Request for an Appeal to Subcommittee of Uniform Practice Code Committee
      A Requesting Party issued a notice under this Rule may appeal a determination made under paragraph (d)(3) of this Rule to a three-member subcommittee comprised of current or former industry members of FINRA's Uniform Practice Code Committee in writing, via facsimile, electronic mail or otherwise in writing, within seven (7) calendar days after service of the notice. The written request for an appeal must be accompanied by proof of payment of the non-refundable Action Determination Appeal Fee. A request for an appeal must set forth with specificity any and all defenses to the Department's determination that a request was unacceptable or otherwise deficient. An appeal to the subcommittee shall operate to stay the processing of the company-related action (i.e., the requested company-related action shall not be processed during the period that the Requesting Party requests an appeal or while any such appeal is pending). Once a written appeal has been received, the Requesting Party may submit any additional supporting written documentation, via facsimile, electronic mail or otherwise, up until the time the appeal is considered by the subcommittee. The subcommittee shall convene once each calendar month to consider all appeals received under this Rule during the prior month. The subcommittee shall render a determination within three (3) business days following the day the appeal is considered by the subcommittee. The subcommittee's determination shall constitute final action by FINRA. The subcommittee's determination shall not constitute an estoppel as to FINRA nor bind FINRA in any subsequent administrative, civil, or disciplinary proceeding. If the Requesting Party fails to file a written request for an appeal within seven (7) calendar days after service of the notice by the Department, the Department's determination shall constitute final action by FINRA.

      • • • Supplementary Material: --------------

      .01 SEA Rule 10b-17 Fee Accumulations. In accordance with the time-frames specified in SEA Rule 10b-17, OTC issuers must provide FINRA with written notice prior to a dividend or any other distribution in cash or in kind, rights or other subscription offerings, forward stock splits, and reverse stock splits. In addition, pursuant to Rule 6490 OTC issuers must pay any applicable fees. Notwithstanding the timeliness of the SEA Rule 10b-17 Action submission or the failure to pay applicable fees, FINRA will make its best efforts to process documentation related to SEA Rule 10b-17 Actions that are not otherwise deemed incomplete or otherwise deficient by FINRA because of the critical nature of this information to the marketplace. Although FINRA may process documentation related to SEA Rule 10b-17 Actions even if a fee remains unpaid, FINRA accumulates all unpaid SEA Rule 10b-17 Action fees associated with a specific OTC issuer symbol. Regardless of the current ownership status or transaction history of an OTC issuer, FINRA will not process documentation related to Voluntary Symbol Request Changes until all unpaid accumulated late fees have been paid for the associated OTC symbol.

      .02 Requests by Third-Parties. Pursuant to SEA Rule 10b-17, OTC issuers must provide FINRA with written notice generally within the time-frames specified in SEA Rule 10b-17. In certain circumstances, FINRA is contacted by a third-party, such as DTCC, foreign exchanges or regulators, members or associated persons, regarding an SEA Rule 10b-17 Action or Other Company Related Action. In such cases, FINRA requests that the third-party contact the issuer in question regarding its obligations under SEA Rule 10b-17 or other rules and regulations, as applicable, and instruct such issuer to contact FINRA directly to provide notice and complete the requisite forms. However, FINRA may in its discretion review and process an SEA Rule 10b-17 Action or Other Company-Related Action based on information from a third-party when it believes such action is necessary for the protection of the market and investors and/or FINRA has been unable to obtain notification from the issuer.

      Amended by SR-FINRA-2010-057 eff. Nov. 12, 2010.
      Adopted by SR-FINRA-2009-089 eff. Sep. 27, 2010.

      Selected Notice: 10-38.