Quick Answer
The responsible broker or dealer must fill any order other than an odd lot, from another broker or dealer or a person in a category it customarily deals with, up to its published quotation size, subject to a timely revised size, bid or offer. A halt stops off-exchange quoting and trading, except as the Limit Up-Limit Down Plan permits.
What a venue publishes, what a firm must honor, and what a halt, pause or circuit breaker takes off the market.
Which One-Liners Win Points?
- A revised size caps the firm quote duty; a revised price lifts it, if communicated before the order is presented, or immediately after completing a transaction in progress at presentation. A price revised the second way still obliges execution at the revised price, up to the published or revised size.
- Offers at stated prices: a member must be prepared to trade at the stated price and under the conditions stated at the time. Qualifying a purportedly firm quotation on inquiry is backing away.
- A firm trading market is expected, under normal circumstances, to trade at least a normal unit at its prevailing quotations, unless the quotation was clearly designated as not firm, or firm for less, when supplied.
- A registered reporting Alternative Display Facility market maker owes, in each security it is registered in, a continuous two-sided quotation of at least one normal unit of trading during regular market hours, subject to excused withdrawal.
- The access fee cap binds any trading center; the ban on a fee or rebate that cannot be determined at execution binds a national securities exchange.
- A volume advertisement purports to report transactions, so the member must believe each counted trade was bona fide; no numeric tolerance exists.
Which Numbers Matter Most?
| Item | Value |
|---|---|
| Circuit breaker levels, S&P 500 Index against the prior close | 7%, 13%, 20%; Level 3 closes the day, at any time |
| Level 1 or Level 2 halt | 15 minutes, once per level per day, only through 3:25 p.m. Eastern (12:25 p.m. on an early close) |
| Limit Up-Limit Down parameter, reference price above $3.00 | Tier 1 5%, Tier 2 10% |
| Over-the-counter (OTC) extraordinary event halt | Up to 10 business days per period, extendable |
| Access fee cap | $0.001 per share at $1.00 or more; 0.1% of the quotation price below |
How Does a Limit State Become a Pause?
- The national best offer equals the lower band, or the national best bid equals the upper band, without crossing: a limit state.
- If every limit state quotation is executed or cancelled within 15 seconds, the stock exits.
- If not, during regular trading hours, the primary listing exchange shall declare a trading pause: no trades, though bids and offers may be displayed.
- A member resumes off-exchange trading once the primary listing exchange has commenced trading and the member has price bands. If that exchange notifies the processor it cannot reopen due to a systems or technology issue, or reopens with a zero bid or offer, processor bands plus trading on another national securities exchange are required.
Which Gotchas Trip Students Up?
- At public dissemination of a market-wide halt, members stop quoting as well as trading, in OTC equity securities too.
- After a Level 1 or Level 2 halt, FINRA may permit off-exchange trading before the primary listing market reopens only if that market has not reopened within 15 minutes of the halt's end and another national securities exchange has commenced trading.
- FINRA will not halt on a foreign regulatory halt imposed solely for a filing deficiency or operational reasons.
- An unpriced indication counts during a halt: bid wanted, offer wanted and name only are all prohibited, except as the Limit Up-Limit Down Plan permits.
- A facility closure is not a security halt; members may trade through other markets not halted.
- Rights and warrants are outside the Limit Up-Limit Down Plan, not Tier 2.
One-Breath Recap
The responsible broker or dealer must fill any order other than an odd lot, from another broker or dealer or a person in a category it customarily deals with, at its published price or better, up to its published size, subject to a timely revised size, bid or offer. Circuit breakers halt trading fifteen minutes on a 7% or 13% decline in the S&P 500 Index, once per level, never after the late-day cutoff, and for the day on a 20% decline. Under the Limit Up-Limit Down Plan, a limit state that does not clear within fifteen seconds during regular trading hours brings a trading pause: no trades, but quotations may be displayed. During a trading halt, members may not trade or publish a quotation or unpriced indication of interest, except as that Plan permits.
Need more than the recap? Read the full Disseminating Quotes and Trade Advertisements unit.