|
|
|
|
|
|
|
the NASD, and it was unfair for me to have to pay membership dues to an organization that was actively helping my competitors to strangle me. A call went to the finest creative legal minds of the NASD to write new rules. The NASD answer seemed quite apparent. Go to the offices at All-Tech and write down everything Houtkin does during a typical trading day and make those actions illegal by passing new regulations or interpreting old regulations to suit the market makers and put Houtkin out of business. We called these rules the Houtkin rules, because the objective was to stop Houtkin from using electronic order execution. If it could stop Houtkin, the NASD thought the problem would be solved. |
|
|
|
|
|
|
|
|
Here's the cunning plan. The market makers sought to deal with the competitive problems posed by SOES by enlisting the support of the NASD in three areas: |
|
|
|
|
| Rule making and interpretation | | 2. | The aggressive investigation of SOES firms and the enforcement of the SOES rules | | 3. | The restriction of NASD admission to SOES firms and an increase in conditions for NASD membership |
|
|
|
|
|
|
In each of these areas, the SEC found that the NASD took steps to constrain the activities of SOES firms. |
|
|
|
|
|
|
|
|
Under the SEC's "firm quote" rule a market maker was required to execute any order presented to it to buy or sell a security at a price at least as favorable to the buyer or seller as the market maker's published bid or offer and up to its published order size. A market maker who failed to meet the firm quote rule obligations was said to have backed away from its quote. NASD rules also require that market makers honor their quotations. |
|
|
|
|
|
|
|
|
The SEC had emphasized that SROs need to enforce strict compliance with the firm quote rule to ensure that investors receive best execution and that the market receives reliable |
|
|
|
|
|