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TOPIC: New Level II Minimum Quote Size

New Level II Minimum Quote Size 7 years 2 months ago #3201

  • rysky007
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OTC Equity Quotation Size

SEC Approves Amended Minimum Quotation Sizes for
OTC Equity Securities on a Pilot Basis

Effective Date: November 5, 2012 ( Due to hurricane the effective date has been shifted to 11.12.12)

Price (Bid or Offer) Minimum Quote Size (# of shares)
$0.0001 to $0.0999 10,000
$0.10 to $0.1999 5,000
$0.20 to $0.5099 2,500
$0.51 to $0.9999 1,000
$1.00 to $174.99 100
$175.00+ 1 1

Executive Summary
The SEC approved amendments to FINRA Rule 6433 (Minimum Quotation
Size Requirements for OTC Equity Securities) to simplify the existing tier
structure, facilitate the display of customer limit orders pursuant to FINRA
Rule 6460 (Display of Customer Limit Orders), and expand the scope of
the rule to encompass quotations displayed by non-market makers. FINRA
will implement the new quotation sizes as a one-year pilot beginning on
November 5, 2012, and ending on October 31, 2013, unless extended or made

Questions regarding this Notice should be directed to Racquel Russell,
Assistant General Counsel, Office of General Counsel, at (202) 728-8363.

Background and Discussion
FINRA Rule 6433 provides that member firms that enter quotations in
OTC equity securities into any inter-dealer quotation system that permits
quotation updates on a real-time basis must enter and honor those
quotations at prescribed minimum sizes. However, under the rule, the
applicable minimum size depends upon the price of the bid or offer and,
therefore, a different minimum quotation size can apply to each side of the
market being quoted by the firm in a given security.2 The amended rule also
expands the scope of the minimum quotation sizes to apply to all quotations
or orders displayed in an inter-dealer quotation system, including quotations
displayed by alternative trading systems and those representing customer
trading interest.

FINRA will monitor the operation of the pilot and, if FINRA concludes that there is a
significant negative impact on the over-the-counter market, FINRA will consider whether
it is appropriate to rescind the pilot prior to October 31, 2013. To permit FINRA and the
Securities and Exchange Commission to assess the impact of the pilot, FINRA will collect
data during the pilot3 and assess, among other things, concerns raised by commenters
during the rule filing process, and whether the pilot has achieved its goals.
If the pilot is not extended or approved as permanent by October 31, 2013, the version of
this rule prior to SR-FINRA-2011-058 will be in effect.
Last Edit: 7 years 3 weeks ago by rysky007.
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