FINRA Quotation Rules

Each rule below targets a different way a market maker's quote could mislead or disadvantage the market, from fake activity to stale information to unlabeled quotes.

Publication of Transactions and Quotations

• Prohibits members from publishing or circulating reports of transactions or quotations unless the member believes them to be bona fide
• A member cannot publish a fictitious transaction or a quote that does not represent genuine trading interest
• Prevents market manipulation through fake transaction reports or misleading quotes

Think of it this way: Every published quote and trade report must be real. No fake prices, no phantom trades.

Offers at Stated Prices (Anti-Backing Away)

• No member shall make an offer to buy or sell at a stated price unless prepared to execute at that price and under the stated conditions
• Backing away (refusing to honor a firm quotation) is a violation
• Deemed conduct inconsistent with just and equitable principles of trade
• Applies to all firm quotations in inter-dealer and customer-facing systems

Exam Tip: Gotchas

• Backing away is a frequently tested concept. If the exam describes a market maker who quotes a stock at $25 ask, then refuses to sell at $25 when a customer wants to buy; that is backing away, a violation of the firm-quote obligation.

Prohibition During Trading Halts

When a trading halt is in effect for a security, no member may:

• Effect any transaction in that security
• Publish a quotation (priced bid/offer)
• Publish an unpriced indication of interest (including "bid wanted" or "offer wanted")
• Publish a bid or offer with a modifier reflecting unsolicited customer interest

Exception: Activity permitted under the Limit Up-Limit Down (LULD) plan

Key point: During a trading halt, everything stops; no trading, no quoting, no indications of interest.

Exam Tip: Gotchas

• The trading-halt prohibition covers all activity, not just trading. Publishing quotes and indications of interest are also prohibited.

OTC Quotation Information Requirement (Initiation or Resumption)

• Broker-dealers may not publish quotations in the OTC market unless they have reviewed current and publicly available information about the issuer
• The broker-dealer must believe the information is accurate and obtained from a reliable source
• Applies when a broker-dealer initiates or resumes quotation activity in an OTC security
• Designed to protect investors from trading in securities with inadequate public information
• Companies that fail to maintain current information may be moved to the OTC Expert Market, where quotations are only visible to broker-dealers (not retail investors)

Thousands of companies have been shifted to the Expert Market for failing to maintain current public information.

Exam Tip: Gotchas

• The OTC current-information requirement applies to OTC quotations specifically, not exchange-listed securities.
• Expert Market restriction: Retail investors cannot see quotes for non-compliant OTC companies. Only broker-dealers can view them.

Identification of Quotations Requirement

• Requires proper identification of the source and nature of published quotations
• Prevents misleading investors about the type or reliability of a quotation
• Ensures nominal (informational) quotes are clearly marked as such

What Should You Check on Exam Day?

• Can you spot a bona-fide-publication violation (a fake transaction report or quote with no genuine trading interest behind it)?
• Do you know a trading halt shuts down transactions, priced quotes, AND unpriced indications of interest (bid/offer wanted) alike?
• Do you know the OTC current-information requirement applies only to OTC quotations, not exchange-listed securities?
• Can you explain what happens to a company moved to the OTC Expert Market (quotes hidden from retail investors)?