5210. Publication of Transactions and Quotations
No member shall publish or circulate, or cause to be published or circulated, any notice, circular, advertisement, newspaper article, investment service, or communication of any kind which purports to report any transaction as a purchase or sale of any security unless such member believes that such transaction was a bona fide purchase or sale of such security; or which purports to quote the bid price or asked price for any security, unless such member believes that such quotation represents a bona fide bid for, or offer of, such security.
• • • Supplementary Material: --------------
.01 Manipulative and Deceptive Quotations. It shall be deemed inconsistent with Rules 2010 (Standards of Commercial Honor and Principles of Trade), 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices) and 5210 (Publication of Transactions and Quotations) for a member to publish or circulate or cause to be published or circulated, by any means whatsoever, any report of any securities transaction or of any purchase or sale of any security unless such member knows or has reason to believe that such transaction was a bona fide transaction, purchase or sale.
Similarly, it shall be deemed inconsistent with Rules 2010, 2020 and 5210 for a member, for itself or for any other person, to publish or circulate or to cause to be published or circulated, by any means whatsoever, any quotation for any security without having reasonable cause to believe that such quotation is a bona fide quotation, is not fictitious and is not published or circulated or caused to be published or circulated for any fraudulent, deceptive or manipulative purpose.
For the purposes of this Rule, the term "quotation" shall include any bid or offer or any formula, such as "bid wanted" or "offer wanted," designed to induce any person to make or submit any bid or offer.
.02 Self-Trades. Transactions in a security resulting from the unintentional interaction of orders originating from the same firm that involve no change in the beneficial ownership of the security, (“self- trades”) generally are bona fide transactions for purposes of Rule 5210; however, members must have policies and procedures in place that are reasonably designed to review their trading activity for, and prevent, a pattern or practice of self-trades resulting from orders originating from a single algorithm or trading desk, or related algorithms or trading desks. Transactions resulting from orders that originate from unrelated algorithms or separate and distinct trading strategies within the same firm would generally be considered bona fide self-trades. Algorithms or trading strategies within the most discrete unit of an effective system of internal controls at a member firm are presumed to be related. This Supplementary Material does not change members' existing obligations under Rules 2010 and 3110.
.03 Disruptive Quoting and Trading Activity Prohibited
(a) No member shall engage in or facilitate disruptive quoting and trading activity as described in paragraph (b), including acting in concert with other persons to effect such activity.
(b) Disruptive quoting and trading activity shall include a frequent pattern in which the following facts are present:
(1) Disruptive Quoting and Trading Activity Type 1:
(A) a party enters multiple limit orders on one side of the market at various price levels (the "Displayed Orders"); and
(B) following the entry of the Displayed Orders, the level of supply and demand for the security changes; and
(C) the party enters one or more orders on the opposite side of the market of the Displayed Orders (the "Contra-Side Orders") that are subsequently executed; and
(D) following the execution of the Contra-Side Orders, the party cancels the Displayed Orders.
(2) Disruptive Quoting and Trading Activity Type 2:
(A) a party narrows the spread for a security by placing an order inside the national best bid and national best offer ("NBBO"); and
(B) the party then executes an order on the opposite side of the market that executes against another market participant that joined the new inside market established by the order described in subparagraph (A).
(c) For purposes of this Supplementary Material .03, disruptive quoting and trading activity shall include a frequent pattern in which the facts listed above are present. Unless otherwise indicated, the order of the events indicating the pattern does not modify the applicability of the Supplementary Material. Further, disruptive quoting and trading activity includes a pattern or practice in which all of the quoting and trading activity is conducted on a single venue as well as a pattern or practice in which some portion of the quoting and trading activity is conducted on a one venue and the other portions of the quoting and trading activity are conducted on one or more other venues.
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Amended by SR-FINRA-2017-004 eff. April 3, 2017. Amended by SR-FINRA-2016-043 eff. Dec. 15, 2016. Amended by SR-FINRA-2014-045 eff. Dec. 1, 2014. Amended by SR-FINRA-2013-036 eff. Aug. 25, 2014. Amended by SR-FINRA-2009-055 eff. Feb. 15, 2010. Selected Notices: 09-72, 14-28, 17-22. |
- Regulatory Notice 18-29September 12, 2018
- Regulatory Notice 18-25August 13, 2018
- Regulatory Notice 17-22June 07, 2017
- Regulatory Notice 15-09March 26, 2015
- Regulatory Notice 14-28June 30, 2014
- Regulatory Notice 11-43September 20, 2011
- Regulatory Notice 09-72December 15, 2009