Chapter 10 Flashcards
Chapter Crunch
Customer limit orders must be displayed within
30 seconds.
For purposes of the Limit Order Display Rule, the definition of a block-sized order is ______ or at least
_______.
10,000 shares & $200,000 in market value
Under the Order Protection Rule, a firm is required to execute customer orders within ______ of the
execution of a proprietary trade that would’ve satisfied the customer’s order
60 seconds
The Easy-to-Borrow List must be updated
daily
Market center reports on efficiency of executions are published __________ (Rule 605)
monthly
A broker-dealer that sells an equity security short must deliver the security by ________ or either purchases or
borrow the security by no later _______________).
By T + 2
No later than T + 3 (a long sale allows two additional days, or T+5
Non-reporting threshold securities include ______ and ____________ . These are not subject to Reg SHO; instead, they’re subject to a FINRA rule that’s modeled after Reg SHO
private companies & private foreign companies
Order routing reports are published by B/Ds ________ (Rule 606)
quarterly
The close-out requirement of Reg SHO applies to _________
all equity transactions
Under Regulation SHO, if a broker-dealer has a fail to deliver position at a clearing firm in a threshold security for a continuous period of 13 settlement days
it must close out the fail to deliver immediately by purchasing securities of a like kind and quantity
The close-out must occur by no later than the start of the trading day after the 13th settlement day (i.e., the morning of the 14th day
Until the broker-dealer closes out the fail, it must borrow, or arrange to borrow (i.e., pre-borrow), the security prior to effecting an additional short sale in the security.
A broker-dealer must borrow, or arrange to borrow, a threshold security prior to effecting an additional short sale in that security after there’s been a fail to deliver position for:
13 consecutive settlement days
On Wednesday, a broker-dealer executes a short sales for regular-way settlement. On Friday, if the shares are not delivered to the contraparty, when must the selling broker-dealer take action?
It must execute a buy-in on the next business day.
Under Regulation SHO Rule 204, a broker-dealer that fails to deliver securities must borrow or purchase the securities immediately. In practice, this means that a broker-dealer needs to close out its fail to deliver on the next business day after the settlement date. Ultimately, the rule attempts to reduce fails.
Under the SEC Display Rule, a market maker that receives a customer limit order, which improves its current quote, must display that order:
Within 30 seconds
A MM is quoting a security @ 22.60-22.78, 10x15. After accepting a customer’s limit order to sell 500 shares at 22.75, it must adjust its quote to:
22.60 - 22.75, 10x5
