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  • 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


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

      .01 The amendments set forth in File No. SR-FINRA-2011-058 shall be in effect until December 7, 2018. If the pilot is not extended or approved as permanent by this date, the version of this Rule prior to SR-FINRA-2011-058 shall be in effect.

      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.