FINRA Quotation and Trading Facility Rules
This section covers the broader FINRA rule framework governing how members quote, trade, and report transactions across different market types.
FINRA Rule 6000 Series - Overview
The 6000 Series is a comprehensive set of rules governing how members handle quotation, order, and transaction reporting. Key subseries include:
| Rule Series | Scope |
|---|---|
| 6100 Series | Quoting and Trading in National Market System (NMS) Stocks |
| 6400 Series | Quoting and Trading in Over-the-Counter (OTC) Equity Securities |
| 6600 Series | OTC Reporting Facility |
| 6700 Series | Trade Reporting and Compliance Engine (TRACE) for fixed income reporting |
Exam Tip: Gotchas
- The 6000 Series covers quotation and trading rules; the 5000 Series covers conduct rules. Do not confuse them. If a question asks about trading practices or reporting, look for 6000 Series rules.
FINRA Rule 6100 Series - NMS Stocks
Key rules for exchange-listed securities:
- Rule 6110 - Trading Otherwise than on an Exchange: Governs OTC trading of exchange-listed securities (third market transactions)
- Rule 6120 - Trading Halts: Authorizes FINRA to halt OTC trading when an exchange halts trading in the same security
- Rule 6121 - Trading Halts Due to Extraordinary Market Volatility: Coordinates with exchange-imposed halts during extreme market conditions
- Rule 6130 - Transactions Related to Initial Public Offerings (IPOs): Governs secondary market trading of IPO securities
Exam Tip: Gotchas
- Rule 6120 coordinates OTC halts with exchange halts. When an exchange halts trading in a security, FINRA halts OTC trading in that same security. They are not independent.
FINRA Rule 6400 Series - OTC Equity Securities
- Governs quotation and trading activities in OTC equity securities not listed on a national exchange
- Includes registration requirements for market makers, quotation obligations, and minimum size requirements
FINRA Rule 5290 - Order Entry and Execution Practices
- Governs how member firms enter and execute orders
- Prohibits practices that would manipulate the market or disadvantage customers
FINRA Rule 5330 - Adjustment of Orders
This rule requires adjustment of open orders on the ex-dividend date for certain corporate actions:
- Reduce orders: Open buy limit orders, open sell stop orders, and open stop-limit orders below the market are reduced by the amount of the dividend on the ex-date
- Orders marked "do not reduce" (DNR) are exempt from adjustment
Example: If a stock has a $0.50 cash dividend and a customer has an open buy limit order at $40:
- On the ex-date, the limit price is automatically reduced to $39.50
- Unless the order was marked DNR
Exam Tip: Gotchas
- Sell limit orders are NOT reduced on the ex-date. Only buy limits, sell stops, and stop-limits below the market get adjusted. The customer wants to sell at a higher price, so reducing makes no sense.
- Orders marked DNR are never adjusted, regardless of order type.