---
kind: "range"
citation: "17 C.F.R. §§ 242.600–242.612"
title: "17"
from: "242.600"
to: "242.612"
count: 13
url: "https://uscodex.org/cfr/17/242.600..242.612"
---

# §242.600. NMS security designation and definitions.

- (a) The term national market system security as used in section 11A(a)(2) of the Act ([15 U.S.C. 78k-1(a)(2)](/usc/15/78k-1.md?p=a-2)) shall mean any NMS security as defined in [paragraph (b)](#b) of this section.
- (b)
  - (1) Actionable indication of interest means any indication of interest that explicitly or implicitly conveys all of the following information with respect to any order available at the venue sending the indication of interest:
    - (i) Symbol;
    - (ii) Side (buy or sell);
    - (iii) A price that is equal to or better than the national best bid for buy orders and the national best offer for sell orders; and
    - (iv) **A size that is at least equal to one round lot.**
  - (2) Administrative data means administrative, control, and other technical messages made available by national securities exchanges and national securities associations pursuant to the effective national market system plan or plans required under [§ 242.603(b)](/cfr/17/242.603.md?p=b) or the technical specifications thereto as of April 9, 2021.
  - (3) Aggregate quotation size means the sum of the quotation sizes of all responsible brokers or dealers who have communicated on any national securities exchange bids or offers for an NMS security at the same price.
  - (4) **Alternative trading system—** has the meaning provided in [§ 242.300(a)](/cfr/17/242.300.md?p=a).
  - (5) Auction information means all information specified by national securities exchange rules or effective national market system plans that is generated by a national securities exchange leading up to and during auctions, including opening, reopening, and closing auctions, and publicly disseminated during the time periods and at the time intervals provided in such rules and plans.
  - (6) Automated quotation means a quotation displayed by a trading center that:
    - (i) Permits an incoming order to be marked as immediate-or-cancel;
    - (ii) Immediately and automatically executes an order marked as immediate-or-cancel against the displayed quotation up to its full size;
    - (iii) Immediately and automatically cancels any unexecuted portion of an order marked as immediate-or-cancel without routing the order elsewhere;
    - (iv) Immediately and automatically transmits a response to the sender of an order marked as immediate-or-cancel indicating the action taken with respect to such order; and
    - (v) Immediately and automatically displays information that updates the displayed quotation to reflect any change to its material terms.
  - (7) Automated trading center means a trading center that:
    - (i) Has implemented such systems, procedures, and rules as are necessary to render it capable of displaying quotations that meet the requirements for an automated quotation set forth in [paragraph (b)(6)](#b-6) of this section;
    - (ii) Identifies all quotations other than automated quotations as manual quotations;
    - (iii) Immediately identifies its quotations as manual quotations whenever it has reason to believe that it is not capable of displaying automated quotations; and
    - (iv) Has adopted reasonable standards limiting when its quotations change from automated quotations to manual quotations, and vice versa, to specifically defined circumstances that promote fair and efficient access to its automated quotations and are consistent with the maintenance of fair and orderly markets.
  - (8) Average effective spread means the share-weighted average of effective spreads for order executions calculated, for buy orders, as double the amount of difference between the execution price and the midpoint of the national best bid and national best offer at the time of order receipt and, for sell orders, as double the amount of difference between the midpoint of the national best bid and national best offer at the time of order receipt and the execution price. For order executions of midpoint-or-better limit orders, average effective spread shall be calculated from the time such orders first become executable rather than the time of order receipt.
  - (9) Average midpoint means the share-weighted average of the midpoint of the national best bid and national best offer at the time of order receipt or, for non-marketable limit orders, midpoint-or-better limit orders, and orders submitted with stop prices, at the time such orders first become executable.
  - (10) Average percentage effective spread means the average effective spread for order executions divided by the average midpoint for order executions.
  - (11) Average percentage realized spread means the average realized spread for order executions divided by the average midpoint for order executions.
  - (12) Average quoted spread means the share-weighted average of the difference between the national best offer and the national best bid at the time of order receipt or, for order executions of midpoint-or-better limit orders, the difference between the national best offer and the national best bid at the time such orders first become executable.
  - (13) Average realized spread means the share-weighted average of realized spreads for order executions calculated, for buy orders, as double the amount of difference between the execution price and the midpoint of the national best bid and national best offer at a specified interval after the time of order execution and, for sell orders, as double the amount of difference between the midpoint and the national best bid and national best offer at a specified interval after the time of order execution and the execution price; provided, however, that the midpoint of the final national best bid and national best offer disseminated for regular trading hours shall be used to calculate a realized spread if it is disseminated less than that specified interval after the time of order execution.
  - (14) **Best available displayed price—** means, with respect to an order to buy, the lower of: the national best offer at the time of order receipt or the price of the best odd-lot order to sell at the time of order receipt as disseminated pursuant to an effective transaction reporting plan or effective national market system plan; and, with respect to an order to sell, the higher of: the national best bid at the time of order receipt or the price of the best odd-lot order to buy at the time of order receipt as disseminated pursuant to an effective transaction reporting plan or effective national market system plan. With respect to a midpoint-or-better limit order, the best available displayed price shall be determined at the time such order becomes executable rather than the time of order receipt.
  - (15) **Best bid and best offer—** mean the highest priced bid and the lowest priced offer.
  - (16) Bid or offer means the bid price or the offer price communicated by a member of a national securities exchange or member of a national securities association to any broker or dealer, or to any customer, at which it is willing to buy or sell one or more round lots of an NMS security, as either principal or agent, but shall not include indications of interest.
  - (17) **Block size with respect to—** an order means it is:
    - (i) Of at least 10,000 shares; or
    - (ii) **For a quantity of stock having a market value of at least $200,000.**
  - (18) Categorized by order size means dividing orders into separate categories for the following sizes:
    - (i) Less than $250 and less than a share;
    - (ii) Less than $250 and odd-lot;
    - (iii) Less than $250 and at least a round lot;
    - (iv) $250 to less than $1,000 and less than a share;
    - (v) $250 to less than $1,000 and odd-lot;
    - (vi) $250 to less than $1,000 and at least a round lot;
    - (vii) $1,000 to less than $5,000 and less than a share;
    - (viii) $1,000 to less than $5,000 and odd-lot;
    - (ix) $1,000 to less than $5,000 and at least a round lot;
    - (x) $5,000 to less than $10,000 and less than a share;
    - (xi) $5,000 to less than $10,000 and odd-lot;
    - (xii) $5,000 to less than $10,000 and at least a round lot;
    - (xiii) $10,000 to less than $20,000 and less than a share;
    - (xiv) $10,000 to less than $20,000 and odd-lot;
    - (xv) $10,000 to less than $20,000 and at least a round lot;
    - (xvi) $20,000 to less than $50,000 and less than a share;
    - (xvii) $20,000 to less than $50,000 and odd-lot;
    - (xviii) $20,000 to less than $50,000 and at least a round lot;
    - (xix) $50,000 to less than $200,000 and less than a share;
    - (xx) $50,000 to less than $200,000 and odd-lot;
- (xxi) $50,000 to less than $200,000 and at least a round lot;
- (xxii) $200,000 or more and less than a share;
- (xxiii) $200,000 or more and odd-lot; and
- (xxiv) $200,000 or more and at least a round lot.
  - (19) Categorized by order type means dividing orders into separate categories for market orders, marketable limit orders (excluding immediate-or-cancel orders), marketable immediate-or-cancel orders, midpoint-or-better limit orders (excluding immediate-or-cancel orders), midpoint-or-better limit orders that are immediate-or-cancel, executable non-marketable limit orders (excluding orders submitted with stop prices, midpoint-or-better limit orders, and immediate-or-cancel orders), executable non-marketable orders that are immediate-or-cancel, executable market orders submitted with stop prices, executable stop marketable limit orders, and executable stop non-marketable limit orders.
  - (20) Categorized by security means dividing orders into separate categories for each NMS stock that is included in a report.
  - (21) Competing consolidator means a securities information processor required to be registered pursuant to [§ 242.614](/cfr/17/242.614.md) ([Rule 614](/cfr/17/614.md)) or a national securities exchange or national securities association that receives information with respect to quotations for and transactions in NMS stocks and generates a consolidated market data product for dissemination to any person.
  - (22) **Consolidated display—** means:
    - (i) The prices, sizes, and market identifications of the national best bid and national best offer for a security; and
    - (ii) **Consolidated last sale information for a security.**
  - (23) Consolidated last sale information means the price, volume, and market identification of the most recent transaction report for a security that is disseminated pursuant to an effective national market system plan.
  - (24) Consolidated market data means the following data, consolidated across all national securities exchanges and national securities associations:
    - (i) Core data;
    - (ii) Regulatory data;
    - (iii) Administrative data;
    - (iv) Self-regulatory organization-specific program data; and
    - (v) Additional regulatory, administrative, or self-regulatory organization-specific program data elements defined as such pursuant to the effective national market system plan or plans required under [§ 242.603(b)](/cfr/17/242.603.md?p=b).
  - (25) Consolidated market data product means any data product developed by a competing consolidator that contains consolidated market data or data components of consolidated market data. For purposes of this paragraph (b)(25), data components of consolidated market data include the enumerated elements, and any subcomponent of the enumerated elements, of consolidated market data in paragraph (b)(24) of this section. All consolidated market data products must reflect data consolidated across all national securities exchanges and national securities associations.
  - (26) **Core data—** means:
    - (i) **The following information with respect to quotations for, and transactions in, NMS stocks—**
      - (A) Quotation sizes;
      - (B) Aggregate quotation sizes;
      - (C) Best bid and best offer;
      - (D) National best bid and national best offer;
      - (E) Protected bid and protected offer;
      - (F) Transaction reports;
      - (G) Last sale data;
      - (H) Odd-lot information;
      - (I) Depth of book data; and
      - (J) **Auction information.**
    - (ii) For purposes of the calculation and dissemination of core data by competing consolidators, as defined in paragraph (b)(21) of this section, and the calculation of core data by self-aggregators, as defined in paragraph (b)(94) of this section, the best bid and best offer, national best bid and national best offer, protected bid and protected offer, and depth of book data shall include odd-lots that when aggregated are equal to or greater than a round lot; such aggregation shall occur across multiple prices and shall be disseminated at the least aggressive price of all such aggregated odd-lots.
    - (iii) Competing consolidators shall represent the quotation sizes of the following data elements, if disseminated in a consolidated market data product as defined in paragraph (b)(25) of this section, as the number of shares rounded down to the nearest multiple of a round lot: The best bid and best offer, national best bid and national best offer, protected bid and protected offer, depth of book data, and auction information.
    - (iv) Competing consolidators shall attribute the following data elements, if disseminated in a consolidated market data product as defined in paragraph (b)(25) of this section, to the national securities exchange or national securities association that is the source of each such data element: Best bid and best offer, national best bid and national best offer, protected bid and protected offer, transaction reports, last sale data, odd-lot information, depth of book data, and auction information.
  - (27) Covered order means any market order or any limit order (including immediate-or-cancel orders) received by a market center, broker, or dealer during regular trading hours at a time when a national best bid and national best offer is being disseminated and after the primary listing market has disseminated its first firm, uncrossed quotations in the security, and, if executed, is executed during regular trading hours; or any non-marketable limit order (including an order submitted with a stop price) received by a market center, broker, or dealer outside of regular trading hours, or at a time before the primary listing market has disseminated its first firm, uncrossed quotations in the security, or at a time when a national best bid and national best offer is not being disseminated and, if executed, is executed during regular trading hours. Covered order shall exclude any order for which the customer requests special handling for execution, including, but not limited to, orders to be executed at a market opening price or a market closing price, orders to be executed only at their full size, orders to be executed on a particular type of tick or bid, orders submitted on a “not held” basis, orders for other than regular settlement, and orders to be executed at prices unrelated to the market price of the security at the time of execution.
  - (28) Customer means any person that is not a broker or dealer.
  - (29) Customer limit order means an order to buy or sell an NMS stock at a specified price that is not for the account of either a broker or dealer; provided, however, that the term customer limit order shall include an order transmitted by a broker or dealer on behalf of a customer.
  - (30) Customer order means an order to buy or sell an NMS security that is not for the account of a broker or dealer, but shall not include any order for a quantity of a security having a market value of at least $50,000 for an NMS security that is an option contract and a market value of at least $200,000 for any other NMS security.
  - (31) Depth of book data means all quotation sizes at each national securities exchange and on a facility of a national securities association at each of the next five prices at which there is a bid that is lower than the national best bid and offer that is higher than the national best offer. For these five prices, the aggregate size available at each price, if any, at each national securities exchange and national securities association shall be attributed to such exchange or association.
  - (32) Directed order means an order from a customer that the customer specifically instructed the broker or dealer to route to a particular venue for execution.
  - (33) Dynamic market monitoring device means any service provided by a vendor on an interrogation device or other display that:
    - (i) Permits real-time monitoring, on a dynamic basis, of transaction reports, last sale data, or quotations with respect to a particular security; and
    - (ii) Displays the most recent transaction report, last sale data, or quotation with respect to that security until such report, data, or quotation has been superseded or supplemented by the display of a new transaction report, last sale data, or quotation reflecting the next reported transaction or quotation in that security.
  - (34) Effective national market system plan means any national market system plan approved by the Commission (either temporarily or on a permanent basis) pursuant to [§ 242.608](/cfr/17/242.608.md).
  - (35) Effective transaction reporting plan means any transaction reporting plan approved by the Commission pursuant to [§ 242.601](/cfr/17/242.601.md).
  - (36) **Electronic communications network—** means, for the purposes of [§ 242.602(b)(5)](/cfr/17/242.602.md?p=b-5), any electronic system that widely disseminates to third parties orders entered therein by an exchange market maker or OTC market maker, and permits such orders to be executed against in whole or in part; except that the term electronic communications network shall not include:
    - (i) Any system that crosses multiple orders at one or more specified times at a single price set by the system (by algorithm or by any derivative pricing mechanism) and does not allow orders to be crossed or executed against directly by participants outside of such times; or
    - (ii) Any system operated by, or on behalf of, an OTC market maker or exchange market maker that executes customer orders primarily against the account of such market maker as principal, other than riskless principal.
  - (37) Exchange market maker means any member of a national securities exchange that is registered as a specialist or market maker pursuant to the rules of such exchange.
  - (38) Exchange-traded security means any NMS security or class of NMS securities listed and registered, or admitted to unlisted trading privileges, on a national securities exchange; provided, however, that securities not listed on any national securities exchange that are traded pursuant to unlisted trading privileges are excluded.
  - (39) **Executable—** means, for any non-marketable buy order (excluding orders submitted with stop prices), that the limit price is equal to or greater than the national best bid during regular trading hours and after the primary listing market has disseminated its first firm, uncrossed quotations in the security, and, for any non-marketable sell order (excluding orders submitted with stop prices), that the limit price is equal to or less than the national best offer during regular trading hours and after the primary listing market has disseminated its first firm, uncrossed quotations in the security. Executable means, for any order submitted with a stop price, that the stop price has been triggered during regular trading hours and after the primary listing market has disseminated its first firm, uncrossed quotations in the security. The time an order becomes executable shall be measured in increments of a millisecond or finer.
  - (40) **Executable stop marketable limit order—** means, for buy orders, orders submitted with stop prices that have limit prices that are equal to or greater than the national best offer at the time such orders become executable, and, for sell orders, orders submitted with stop prices that have limit prices that are equal to or less than the national best bid at the time such orders become executable.
  - (41) **Executable stop non-marketable limit order—** means, for buy orders, orders submitted with stop prices that have limit prices that are less than the national best offer at the time such orders become executable, and, for sell orders, orders submitted with stop prices that have limit prices that are greater than the national best bid at the time such orders become executable.
  - (42) **Executed at the quote—** means, for buy orders, execution at a price equal to the national best offer at the time of order receipt and, for sell orders, execution at a price equal to the national best bid at the time of order receipt.
  - (43) **Executed outside the best available displayed price—** means, for buy orders, execution at a price higher than the best available displayed price; and, for sell orders, execution at a price lower than the best available displayed price.
  - (44) **Executed outside the quote—** means, for buy orders, execution at a price higher than the national best offer at the time of order receipt and, for sell orders, execution at a price lower than the national best bid at the time of order receipt.
  - (45) **Executed with price improvement—** means, for buy orders, execution at a price lower than the national best offer at the time of order receipt and, for sell orders, execution at a price higher than the national best bid at the time of order receipt.
  - (46) **Executed with price improvement relative to the best available displayed price—** means, for buy orders, execution at a price lower the best available displayed price and, for sell orders, execution at a price higher than the best available displayed price.
  - (47) Intermarket sweep order means a limit order for an NMS stock that meets the following requirements:
    - (i) When routed to a trading center, the limit order is identified as an intermarket sweep order; and
    - (ii) Simultaneously with the routing of the limit order identified as an intermarket sweep order, one or more additional limit orders, as necessary, are routed to execute against the full displayed size of any protected bid, in the case of a limit order to sell, or the full displayed size of any protected offer, in the case of a limit order to buy, for the NMS stock with a price that is superior to the limit price of the limit order identified as an intermarket sweep order. These additional routed orders also must be marked as intermarket sweep orders.
  - (48) Interrogation device means any securities information retrieval system capable of displaying transaction reports, last sale data, or quotations upon inquiry, on a current basis on a terminal or other device.
  - (49) Joint self-regulatory organization plan means a plan as to which two or more self-regulatory organizations, acting jointly, are sponsors.
  - (50) Last sale data means any price or volume data associated with a transaction.
  - (51) Listed equity security means any equity security listed and registered, or admitted to unlisted trading privileges, on a national securities exchange.
  - (52) Listed option means any option traded on a registered national securities exchange or automated facility of a national securities association.
  - (53) Make publicly available means posting on an internet website that is free and readily accessible to the public, furnishing a written copy to customers on request without charge, and notifying customers at least annually in writing that a written copy will be furnished on request.
  - (54) Manual quotation means any quotation other than an automated quotation.
  - (55) Market center means any exchange market maker, OTC market maker, alternative trading system, national securities exchange, or national securities association.
  - (56) **Marketable limit order—** means, with respect to an order received at a time when a national best bid and national best offer is being disseminated and after the primary listing market has disseminated its first firm, uncrossed quotations in the security, any buy order with a limit price equal to or greater than the national best offer at the time of order receipt, or any sell order with a limit price equal to or less than the national best bid at the time of order receipt, and, with respect to an order received at a time when a national best bid and national best offer is not being disseminated, any buy order with a limit price equal to or greater than the national best offer at the time that the national best offer is first disseminated during regular trading hours after the time of order receipt, or any sell order with a limit price equal to or less than the national best bid time at the time that the national best bid is first disseminated during regular trading hours after the time of order receipt. For orders received at a time when the national best bid and national best offer is being disseminated but the primary listing market has not disseminated its first firm, uncrossed quotations in the security, whether an order is a marketable limit order shall be determined from the time that the primary listing market disseminates its first firm, uncrossed quotations in the security.
  - (57) **Midpoint-or-better limit order—** means, with respect to an order received at a time when a national best bid and national best offer is being disseminated and the primary listing market has disseminated its first firm, uncrossed quotations in the security, any non-marketable buy order with a limit price that is equal to or higher than the midpoint of the national best bid and national best offer at the time of order receipt and any non-marketable sell order with a limit price that is equal to or lower than the midpoint of the national best bid and national best offer at the time of order receipt, and, with respect to an order received at a time when a national best bid and national best offer is not being disseminated, any non-marketable buy order with a limit price that is equal to or higher than the midpoint of the national best bid and national best offer at the time that the national best bid and national best offer is first disseminated after the time of order receipt, or any non-marketable sell order with a limit price that is equal to or lower than the midpoint of the national best bid and national best offer at the time that the national best bid and national best offer is first disseminated after the time of order receipt. For orders received at a time when the national best bid and national best offer is being disseminated but the primary listing market has not disseminated its first firm, uncrossed quotations in the security, whether an order is a midpoint-or-better limit order shall be determined from the time that the primary listing market disseminates its first firm, uncrossed quotations in the security.
  - (58) Moving ticker means any continuous real-time moving display of transaction reports or last sale data (other than a dynamic market monitoring device) provided on an interrogation or other display device.
  - (59) Nasdaq security means any registered security listed on The Nasdaq Stock Market, Inc.
  - (60) **National best bid and national best offer—** means, with respect to quotations for an NMS stock, the best bid and best offer for such stock that are calculated and disseminated on a current and continuing basis by a competing consolidator or calculated by a self-aggregator and, for NMS securities other than NMS stocks, the best bid and best offer for such security that are calculated and disseminated on a current and continuing basis by a plan processor pursuant to an effective national market system plan; provided, that in the event two or more market centers transmit to the plan processor, a competing consolidator or a self-aggregator identical bids or offers for an NMS security, the best bid or best offer (as the case may be) shall be determined by ranking all such identical bids or offers (as the case may be) first by size (giving the highest ranking to the bid or offer associated with the largest size), and then by time (giving the highest ranking to the bid or offer received first in time).
  - (61) National market system plan means any joint self-regulatory organization plan in connection with:
    - (i) The planning, development, operation or regulation of a national market system (or a subsystem thereof) or one or more facilities thereof; or
    - (ii) The development and implementation of procedures and/or facilities designed to achieve compliance by self-regulatory organizations and their members with any section of this Regulation NMS and [part 240](/cfr/17/part240.md), [subpart A](/cfr/17/subpartA.md), of this chapter promulgated pursuant to section 11A of the Act ([15 U.S.C. 78k-1](/usc/15/78k-1.md)).
  - (62) National securities association means any association of brokers and dealers registered pursuant to section 15A of the Act ([15 U.S.C. 78o-3](/usc/15/78o-3.md)).
  - (63) National securities exchange means any exchange registered pursuant to section 6 of the Act ([15 U.S.C. 78f](/usc/15/78f.md)).
  - (64) NMS security means any security or class of securities for which transaction reports are collected, processed, and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options.
  - (65) NMS stock means any NMS security other than an option.
  - (66) Non-directed order means any order from a customer other than a directed order.
  - (67) Non-marketable limit order means any limit order other than a marketable limit order.
  - (68) Odd-lot means an order for the purchase or sale of an NMS stock in an amount less than a round lot.
  - (69) **Odd-lot information—** means:
    - (i) Odd-lot transaction data disseminated pursuant to the effective national market system plan or plans required under [§ 242.603(b)](/cfr/17/242.603.md?p=b) as of April 9, 2021;
    - (ii) Odd-lots at a price greater than or equal to the national best bid and less than or equal to the national best offer, aggregated at each price level at each national securities exchange and national securities association; and
    - (iii) **Best odd-lot order to buy and best odd-lot order to sell.** The best odd-lot order to buy means the highest priced odd-lot order to buy that is priced higher than the national best bid, and the best odd-lot order to sell means the lowest priced odd-lot order to sell that is priced lower than the national best offer, for an NMS stock that are calculated and disseminated on a current and continuing basis by a competing consolidator or plan processor or calculated by a self-aggregator; provided, that in the event two or more market centers transmit to a competing consolidator, plan processor, or a self-aggregator identical odd-lot buy orders or odd-lot sell orders for an NMS stock, the highest priced odd-lot buy order or lowest priced odd-lot sell order (as the case may be) shall be determined by ranking all such identical odd-lot buy orders or odd-lot sell orders (as the case may be) first by size (giving the highest ranking to the odd-lot buy order or odd-lot sell order associated with the largest size), and then by time (giving the highest ranking to the odd-lot buy order or odd-lot sell order received first in time).
  - (70) Options class means all of the put option or call option series overlying a security, as defined in section 3(a)(10) of the Act ([15 U.S.C. 78c(a)(10)](/usc/15/78c.md?p=a-10)).
  - (71) Options series means the contracts in an options class that have the same unit of trade, expiration date, and exercise price, and other terms or conditions.
  - (72) Order size benchmark means the number of shares of the full displayed size of all protected bids at the same price as the national best bid at the time of order receipt, in the case of a market or limit order to sell, or the full displayed size of all protected offers at the same price as the national best offer at the time of order receipt, in the case of a market or limit order to buy. For midpoint-or-better limit orders, the full displayed size should be measured at the time the order becomes executable rather than the time of order receipt. For each order, the share count shall be capped at the order size.
  - (73) Orders providing liquidity means orders that were executed against after resting at a trading center.
  - (74) Orders removing liquidity means orders that executed against resting trading interest at a trading center.
  - (75) OTC market maker means any dealer that holds itself out as being willing to buy from and sell to its customers, or others, in the United States, an NMS stock for its own account on a regular or continuous basis otherwise than on a national securities exchange in amounts of less than block size.
  - (76) **Participants,—** when used in connection with a national market system plan, means any self-regulatory organization which has agreed to act in accordance with the terms of the plan but which is not a signatory of such plan.
  - (77) **Payment for order flow—** has the meaning provided in [§ 240.10b-10](/cfr/17/240.10b-10.md) of this chapter.
  - (78) Plan processor means any self-regulatory organization or securities information processor acting as an exclusive processor in connection with the development, implementation and/or operation of any facility contemplated by an effective national market system plan.
  - (79) **Primary listing exchange—** means, for each NMS stock, the national securities exchange identified as the primary listing exchange in the effective national market system plan or plans required under [§ 242.603(b)](/cfr/17/242.603.md?p=b).
  - (80) Profit-sharing relationship means any ownership or other type of affiliation under which the broker or dealer, directly or indirectly, may share in any profits that may be derived from the execution of non-directed orders.
  - (81) Protected bid or protected offer means a quotation in an NMS stock that:
    - (i) Is displayed by an automated trading center;
    - (ii) Is disseminated pursuant to an effective national market system plan; and
    - (iii) Is an automated quotation that is the best bid or best offer of a national securities exchange, or the best bid or best offer of a national securities association.
  - (82) Protected quotation means a protected bid or a protected offer.
  - (83) Published aggregate quotation size means the aggregate quotation size calculated by a national securities exchange and displayed by a vendor on a terminal or other display device at the time an order is presented for execution to a responsible broker or dealer.
  - (84) Published bid and published offer means the bid or offer of a responsible broker or dealer for an NMS security communicated by it to its national securities exchange or association pursuant to [§ 242.602](/cfr/17/242.602.md) and displayed by a vendor on a terminal or other display device at the time an order is presented for execution to such responsible broker or dealer.
  - (85) Published quotation size means the quotation size of a responsible broker or dealer communicated by it to its national securities exchange or association pursuant to [§ 242.602](/cfr/17/242.602.md) and displayed by a vendor on a terminal or other display device at the time an order is presented for execution to such responsible broker or dealer.
  - (86) Quotation means a bid or an offer.
  - (87) **Quotation size,—** when used with respect to a responsible broker's or dealer's bid or offer for an NMS security, means:
    - (i) The number of shares (or units of trading) of that security which such responsible broker or dealer has specified, for purposes of dissemination to vendors, that it is willing to buy at the bid price or sell at the offer price comprising its bid or offer, as either principal or agent; or
    - (ii) In the event such responsible broker or dealer has not so specified, a normal unit of trading for that NMS security.
  - (88) Regular trading hours means the time between 9:30 a.m. and 4 p.m. Eastern Time, or such other time as is set forth in the procedures established pursuant to [§ 242.605(a)(3)](/cfr/17/242.605.md?p=a-3).
  - (89) **Regulatory data—** means:
    - (i) Information required to be collected or calculated by the primary listing exchange for an NMS stock and provided to competing consolidators and self-aggregators pursuant to the effective national market system plan or plans required under [§ 242.603(b)](/cfr/17/242.603.md?p=b), including, at a minimum:
      - (A) Information regarding Short Sale Circuit Breakers pursuant to [§ 242.201](/cfr/17/242.201.md);
      - (B) Information regarding Price Bands required pursuant to the Plan to Address Extraordinary Market Volatility (LULD Plan);
      - (C) Information relating to regulatory halts or trading pauses (news dissemination/pending, LULD, Market-Wide Circuit Breakers) and reopenings or resumptions;
      - (D) The official opening and closing prices of the primary listing exchange;
      - (E) An indicator of the applicable round lot size; and
      - (F) An indicator of the applicable minimum pricing increment required under [§ 242.612](/cfr/17/242.612.md).
    - (ii) Information required to be collected or calculated by the national securities exchange or national securities association on which an NMS stock is traded and provided to competing consolidators and self-aggregators pursuant to the effective national market system plan or plans required under [§ 242.603(b)](/cfr/17/242.603.md?p=b), including, at a minimum:
      - (A) Whenever such national securities exchange or national securities association receives a bid (offer) below (above) an NMS stock's lower (upper) LULD price band, an appropriate regulatory data flag identifying the bid (offer) as non-executable; and
      - (B) **Other regulatory messages including subpenny execution and trade-though exempt indicators.**
    - (iii) For purposes of paragraph (b)(89)(i)(C) of this section, the primary listing exchange that has the largest proportion of companies included in the S&P 500 Index shall monitor the S&P 500 Index throughout the trading day, determine whether a Level 1, Level 2, or Level 3 decline, as defined in self-regulatory organization rules related to Market-Wide Circuit Breakers, has occurred, and immediately inform the other primary listing exchanges of all such declines.
    - (iv) The primary listing exchange shall also provide the information required under paragraphs (b)(89)(i)(E) and (F) of this section to the applicable plan processor for dissemination.
  - (90) **Responsible broker or dealer—** means:
    - (i) When used with respect to bids or offers communicated on a national securities exchange, any member of such national securities exchange who communicates to another member on such national securities exchange, at the location (or locations) or through the facility or facilities designated by such national securities exchange for trading in an NMS security a bid or offer for such NMS security, as either principal or agent; provided, however, that, in the event two or more members of a national securities exchange have communicated on or through such national securities exchange bids or offers for an NMS security at the same price, each such member shall be considered a responsible broker or dealer for that bid or offer, subject to the rules of priority and precedence then in effect on that national securities exchange; and further provided, that for a bid or offer which is transmitted from one member of a national securities exchange to another member who undertakes to represent such bid or offer on such national securities exchange as agent, only the last member who undertakes to represent such bid or offer as agent shall be considered the responsible broker or dealer for that bid or offer; and
    - (ii) When used with respect to bids and offers communicated by a member of an association to a broker or dealer or a customer, the member communicating the bid or offer (regardless of whether such bid or offer is for its own account or on behalf of another person).
  - (91) Revised bid or offer means a market maker's bid or offer which supersedes its published bid or published offer.
  - (92) Revised quotation size means a market maker's quotation size which supersedes its published quotation size.
  - (93) **Round lot—** means:
    - (i) For any NMS stock for which the average closing price on the primary listing exchange during the prior Evaluation Period was:
      - (A) $250.00 or less per share, an order for the purchase or sale of an NMS stock of 100 shares;
      - (B) $250.01 to $1,000.00 per share, an order for the purchase or sale of an NMS stock of 40 shares;
      - (C) $1,000.01 to $10,000.00 per share, an order for the purchase or sale of an NMS stock of 10 shares;
      - (D) $10,000.01 or more per share, an order for the purchase or sale of an NMS stock of 1 share; and
    - (ii) **New NMS stocks.** Any security that becomes an NMS stock during an operative period as described in paragraph (b)(93)(iv) of this section shall be assigned a round lot of 100 shares.
    - (iii) **For purposes of this section only, the Evaluation Period means—**
      - (A) All trading days in March for the round lot assigned on the first business day of May; and
      - (B) All trading days in September for the round lot assigned on the first business day of November during which the average closing price of an NMS stock on the primary listing exchange shall be measured by the primary listing exchange to determine the round lot for each NMS stock.
    - (iv) The round lot assigned under this section shall be operative on:
      - (A) The first business day of May for the March Evaluation Period and continue through the last business day of October of the calendar year; and
      - (B) The first business day of November for the September Evaluation Period and continue through the last business day of April of the next calendar year.
  - (94) Self-aggregator means a broker, dealer, national securities exchange, national securities association, or investment adviser registered with the Commission that receives information with respect to quotations for and transactions in NMS stocks, including all data necessary to generate consolidated market data, and generates consolidated market data solely for internal use. A self-aggregator may make consolidated market data available to its affiliates that are registered with the Commission for their internal use. Except as provided in the preceding sentence, a self-aggregator may not disseminate or otherwise make available consolidated market data, or components of consolidated market data, as provided in paragraph (b)(25) of this section, to any person.
  - (95) Self-regulatory organization means any national securities exchange or national securities association.
  - (96) **Self-regulatory organization-specific program data—** means:
    - (i) Information related to retail liquidity programs specified by the rules of national securities exchanges and disseminated pursuant to the effective national market system plan or plans required under [§ 242.603(b)](/cfr/17/242.603.md?p=b) as of April 9, 2021; and
    - (ii) Other self-regulatory organization-specific information with respect to quotations for or transactions in NMS stocks as specified by the effective national market system plan or plans required under [§ 242.603(b)](/cfr/17/242.603.md?p=b).
  - (97) **Specified persons,—** when used in connection with any notification required to be provided pursuant to [§ 242.602(a)(3)](/cfr/17/242.602.md?p=a-3) and any election (or withdrawal thereof) permitted under [§ 242.602(a)(5)](/cfr/17/242.602.md?p=a-5), means:
    - (i) Each vendor;
    - (ii) Each plan processor; and
    - (iii) The processor for the Options Price Reporting Authority (in the case of a notification for a subject security which is a class of securities underlying options admitted to trading on any national securities exchange).
  - (98) **Sponsor,—** when used in connection with a national market system plan, means any self-regulatory organization which is a signatory to such plan and has agreed to act in accordance with the terms of the plan.
  - (99) SRO display-only facility means a facility operated by or on behalf of a national securities exchange or national securities association that displays quotations in a security, but does not execute orders against such quotations or present orders to members for execution.
  - (100) SRO trading facility means a facility operated by or on behalf of a national securities exchange or a national securities association that executes orders in a security or presents orders to members for execution.
  - (101) **Subject security—** means:
    - (i) **With respect to a national securities exchange—**
      - (A) Any exchange-traded security other than a security for which the executed volume of such exchange, during the most recent calendar quarter, comprised one percent or less of the aggregate trading volume for such security as reported pursuant to an effective transaction reporting plan or effective national market system plan; and
      - (B) Any other NMS security for which such exchange has in effect an election, pursuant to [§ 242.602(a)(5)(i)](/cfr/17/242.602.md?p=a-5-i), to collect, process, and make available to a vendor bids, offers, quotation sizes, and aggregate quotation sizes communicated on such exchange; and
    - (ii) **With respect to a member of a national securities association—**
      - (A) Any exchange-traded security for which such member acts in the capacity of an OTC market maker unless the executed volume of such member, during the most recent calendar quarter, comprised one percent or less of the aggregate trading volume for such security as reported pursuant to an effective transaction reporting plan or effective national market system plan; and
      - (B) Any other NMS security for which such member acts in the capacity of an OTC market maker and has in effect an election, pursuant to [§ 242.602(a)(5)(ii)](/cfr/17/242.602.md?p=a-5-ii), to communicate to its association bids, offers, and quotation sizes for the purpose of making such bids, offers, and quotation sizes available to a vendor.
  - (102) Time of order execution means the time (at a minimum to the millisecond) that an order was executed at any venue.
  - (103) Time of order receipt means the time (at a minimum to the millisecond) that an order was received by a market center for execution, or in the case of a broker or dealer that is not acting as a market center, the time (at a minimum to the millisecond) that an order was received by the broker or dealer for execution.
  - (104) **Time of the transaction—** has the meaning provided in [§ 240.10b-10](/cfr/17/240.10b-10.md) of this chapter.
  - (105) Trade-through means the purchase or sale of an NMS stock during regular trading hours, either as principal or agent, at a price that is lower than a protected bid or higher than a protected offer.
  - (106) Trading center means a national securities exchange or national securities association that operates an SRO trading facility, an alternative trading system, an exchange market maker, an OTC market maker, or any other broker or dealer that executes orders internally by trading as principal or crossing orders as agent.
  - (107) **Trading rotation—** means, with respect to an options class, the time period on a national securities exchange during which:
    - (i) Opening, re-opening, or closing transactions in options series in such options class are not yet completed; and
    - (ii) Continuous trading has not yet commenced or has not yet ended for the day in options series in such options class.
  - (108) Transaction report means a report containing the price and volume associated with a transaction involving the purchase or sale of one or more round lots of a security.
  - (109) Transaction reporting association means any person authorized to implement or administer any transaction reporting plan on behalf of persons acting jointly under [§ 242.601(a)](/cfr/17/242.601.md?p=a).
  - (110) Transaction reporting plan means any plan for collecting, processing, making available or disseminating transaction reports with respect to transactions in securities filed with the Commission pursuant to, and meeting the requirements of, [§ 242.601](/cfr/17/242.601.md).
  - (111) Vendor means any securities information processor engaged in the business of disseminating transaction reports, last sale data, or quotations with respect to NMS securities to brokers, dealers, or investors on a real-time or other current and continuing basis, whether through an electronic communications network, moving ticker, or interrogation device.

# §242.601. Dissemination of transaction reports and last sale data with respect to transactions in NMS stocks.

- (a) **Filing and effectiveness of transaction reporting plans.**
  - (1) Every national securities exchange shall file a transaction reporting plan regarding transactions in listed equity and Nasdaq securities executed through its facilities, and every national securities association shall file a transaction reporting plan regarding transactions in listed equity and Nasdaq securities executed by its members otherwise than on a national securities exchange.
  - (2) Any transaction reporting plan, or any amendment thereto, filed pursuant to this section shall be filed with the Commission, and considered for approval, in accordance with the procedures set forth in § [242.608(a)](/cfr/17/242.608.md?p=a) and [(b)](/cfr/17/242.608.md?p=b). Any such plan, or amendment thereto, shall specify, at a minimum:
    - (i) The listed equity and Nasdaq securities or classes of such securities for which transaction reports shall be required by the plan;
    - (ii) Reporting requirements with respect to transactions in listed equity securities and Nasdaq securities, for any broker or dealer subject to the plan;
    - (iii) The manner of collecting, processing, sequencing, making available and disseminating transaction reports and last sale data reported pursuant to such plan;
    - (iv) The manner in which such transaction reports reported pursuant to such plan are to be consolidated with transaction reports from national securities exchanges and national securities associations reported pursuant to any other effective transaction reporting plan;
    - (v) The applicable standards and methods which will be utilized to ensure promptness of reporting, and accuracy and completeness of transaction reports;
    - (vi) Any rules or procedures which may be adopted to ensure that transaction reports or last sale data will not be disseminated in a fraudulent or manipulative manner;
    - (vii) Specific terms of access to transaction reports made available or disseminated pursuant to the plan; and
    - (viii) That transaction reports or last sale data made available to any vendor for display on an interrogation device identify the marketplace where each transaction was executed.
  - (3) No transaction reporting plan filed pursuant to this section, or any amendment to an effective transaction reporting plan, shall become effective unless approved by the Commission or otherwise permitted in accordance with the procedures set forth in [§ 242.608](/cfr/17/242.608.md).
- (b) **Prohibitions and reporting requirements.**
  - (1) No broker or dealer may execute any transaction in, or induce or attempt to induce the purchase or sale of, any NMS stock:
    - (i) On or through the facilities of a national securities exchange unless there is an effective transaction reporting plan with respect to transactions in such security executed on or through such exchange facilities; or
    - (ii) Otherwise than on a national securities exchange unless there is an effective transaction reporting plan with respect to transactions in such security executed otherwise than on a national securities exchange by such broker or dealer.
  - (2) Every broker or dealer who is a member of a national securities exchange or national securities association shall promptly transmit to the exchange or association of which it is a member all information required by any effective transaction reporting plan filed by such exchange or association (either individually or jointly with other exchanges and/or associations).
- (c) **Retransmission of transaction reports or last sale data.** Notwithstanding any provision of any effective transaction reporting plan, no national securities exchange or national securities association may, either individually or jointly, by rule, stated policy or practice, transaction reporting plan or otherwise, prohibit, condition or otherwise limit, directly or indirectly, the ability of any vendor to retransmit, for display in moving tickers, transaction reports or last sale data made available pursuant to any effective transaction reporting plan; provided, however, that a national securities exchange or national securities association may, by means of an effective transaction reporting plan, condition such retransmission upon appropriate undertakings to ensure that any charges for the distribution of transaction reports or last sale data in moving tickers permitted by [paragraph (d)](#d) of this section are collected.
- (d) **Charges.** Nothing in this section shall preclude any national securities exchange or national securities association, separately or jointly, pursuant to the terms of an effective transaction reporting plan, from imposing reasonable, uniform charges (irrespective of geographic location) for distribution of transaction reports or last sale data.
- (e) **Appeals.** The Commission may, in its discretion, entertain appeals in connection with the implementation or operation of any effective transaction reporting plan in accordance with the provisions of [§ 242.608(d)](/cfr/17/242.608.md?p=d).
- (f) **Exemptions.** The Commission may exempt from the provisions of this section, either unconditionally or on specified terms and conditions, any national securities exchange, national securities association, broker, dealer, or specified security if the Commission determines that such exemption is consistent with the public interest, the protection of investors and the removal of impediments to, and perfection of the mechanisms of, a national market system.

# §242.602. Dissemination of quotations in NMS securities.

- (a) **Dissemination requirements for national securities exchanges and national securities associations.**
  - (1) Every national securities exchange and national securities association shall establish and maintain procedures and mechanisms for collecting bids, offers, quotation sizes, and aggregate quotation sizes from responsible brokers or dealers who are members of such exchange or association, processing such bids, offers, and sizes, and making such bids, offers, and sizes available to vendors, as follows:
    - (i) Each national securities exchange shall at all times such exchange is open for trading, collect, process, and make available to vendors the best bid, the best offer, and aggregate quotation sizes for each subject security listed or admitted to unlisted trading privileges which is communicated on any national securities exchange by any responsible broker or dealer, but shall not include:
      - (A) Any bid or offer executed immediately after communication and any bid or offer communicated by a responsible broker or dealer other than an exchange market maker which is cancelled or withdrawn if not executed immediately after communication; and
      - (B) Any bid or offer communicated during a period when trading in that security has been suspended or halted, or prior to the commencement of trading in that security on any trading day, on that exchange.
    - (ii) Each national securities association shall, at all times that last sale information with respect to NMS securities is reported pursuant to an effective transaction reporting plan, collect, process, and make available to vendors the best bid, best offer, and quotation sizes communicated otherwise than on an exchange by each member of such association acting in the capacity of an OTC market maker for each subject security and the identity of that member (excluding any bid or offer executed immediately after communication), except during any period when over-the-counter trading in that security has been suspended.
  - (2) Each national securities exchange shall, with respect to each published bid and published offer representing a bid or offer of a member for a subject security, establish and maintain procedures for ascertaining and disclosing to other members of that exchange, upon presentation of orders sought to be executed by them in reliance upon [paragraph (b)(2)](#b-2) of this section, the identity of the responsible broker or dealer who made such bid or offer and the quotation size associated with it.
  - (3)
    - (i) If, at any time a national securities exchange is open for trading, such exchange determines, pursuant to rules approved by the Commission pursuant to section 19(b)(2) of the Act ([15 U.S.C. 78s(b)(2)](/usc/15/78s.md?p=b-2)), that the level of trading activities or the existence of unusual market conditions is such that the exchange is incapable of collecting, processing, and making available to vendors the data for a subject security required to be made available pursuant to [paragraph (a)(1)](#a-1) of this section in a manner that accurately reflects the current state of the market on such exchange, such exchange shall immediately notify all specified persons of that determination. Upon such notification, responsible brokers or dealers that are members of that exchange shall be relieved of their obligation under paragraphs [(b)(2)](#b-2) and [(c)(3)](#c-3) of this section and such exchange shall be relieved of its obligations under paragraphs [(a)(1)](#a-1) and [(2)](#a-2) of this section for that security; provided, however, that such exchange will continue, to the maximum extent practicable under the circumstances, to collect, process, and make available to vendors data for that security in accordance with [paragraph (a)(1)](#a-1) of this section.
    - (ii) During any period a national securities exchange, or any responsible broker or dealer that is a member of that exchange, is relieved of any obligation imposed by this section for any subject security by virtue of a notification made pursuant to [paragraph (a)(3)(i)](#a-3-i) of this section, such exchange shall monitor the activity or conditions which formed the basis for such notification and shall immediately renotify all specified persons when that exchange is once again capable of collecting, processing, and making available to vendors the data for that security required to be made available pursuant to [paragraph (a)(1)](#a-1) of this section in a manner that accurately reflects the current state of the market on such exchange. Upon such renotification, any exchange or responsible broker or dealer which had been relieved of any obligation imposed by this section as a consequence of the prior notification shall again be subject to such obligation.
  - (4) Nothing in this section shall preclude any national securities exchange or national securities association from making available to vendors indications of interest or bids and offers for a subject security at any time such exchange or association is not required to do so pursuant to [paragraph (a)(1)](#a-1) of this section.
  - (5)
    - (i) Any national securities exchange may make an election for purposes of the definition of subject security in [§ 242.600(b)(101)](/cfr/17/242.600.md?p=b-101) for any NMS security, by collecting, processing, and making available bids, offers, quotation sizes, and aggregate quotation sizes in that security; except that for any NMS security previously listed or admitted to unlisted trading privileges on only one exchange and not traded by any OTC market maker, such election shall be made by notifying all specified persons, and shall be effective at the opening of trading on the business day following notification.
    - (ii) Any member of a national securities association acting in the capacity of an OTC market maker may make an election for purposes of the definition of subject security in [§ 242.600(b)(101)](/cfr/17/242.600.md?p=b-101) for any NMS security, by communicating to its association bids, offers, and quotation sizes in that security; except that for any other NMS security listed or admitted to unlisted trading privileges on only one exchange and not traded by any other OTC market maker, such election shall be made by notifying its association and all specified persons, and shall be effective at the opening of trading on the business day following notification.
    - (iii) The election of a national securities exchange or member of a national securities association for any NMS security pursuant to this [paragraph (a)(5)](#a-5) shall cease to be in effect if such exchange or member ceases to make available or communicate bids, offers, and quotation sizes in such security.
- (b) **Obligations of responsible brokers and dealers.**
  - (1) Each responsible broker or dealer shall promptly communicate to its national securities exchange or national securities association, pursuant to the procedures established by that exchange or association, its best bids, best offers, and quotation sizes for any subject security.
  - (2) Subject to the provisions of [paragraph (b)(3)](#b-3) of this section, each responsible broker or dealer shall be obligated to execute any order to buy or sell a subject security, other than an odd-lot order, presented to it by another broker or dealer, or any other person belonging to a category of persons with whom such responsible broker or dealer customarily deals, at a price at least as favorable to such buyer or seller as the responsible broker's or dealer's published bid or published offer (exclusive of any commission, commission equivalent or differential customarily charged by such responsible broker or dealer in connection with execution of any such order) in any amount up to its published quotation size.
  - (3)
    - (i) No responsible broker or dealer shall be obligated to execute a transaction for any subject security as provided in [paragraph (b)(2)](#b-2) of this section to purchase or sell that subject security in an amount greater than such revised quotation size if:
      - (A) Prior to the presentation of an order for the purchase or sale of a subject security, a responsible broker or dealer has communicated to its exchange or association, pursuant to [paragraph (b)(1)](#b-1) of this section, a revised quotation size; or
      - (B) At the time an order for the purchase or sale of a subject security is presented, a responsible broker or dealer is in the process of effecting a transaction in such subject security, and immediately after the completion of such transaction, it communicates to its exchange or association a revised quotation size, such responsible broker or dealer shall not be obligated by [paragraph (b)(2)](#b-2) of this section to purchase or sell that subject security in an amount greater than such revised quotation size.
    - (ii) No responsible broker or dealer shall be obligated to execute a transaction for any subject security as provided in [paragraph (b)(2)](#b-2) of this section if:
      - (A) Before the order sought to be executed is presented, such responsible broker or dealer has communicated to its exchange or association pursuant to [paragraph (b)(1)](#b-1) of this section, a revised bid or offer; or
      - (B) At the time the order sought to be executed is presented, such responsible broker or dealer is in the process of effecting a transaction in such subject security, and, immediately after the completion of such transaction, such responsible broker or dealer communicates to its exchange or association pursuant to [paragraph (b)(1)](#b-1) of this section, a revised bid or offer; provided, however, that such responsible broker or dealer shall nonetheless be obligated to execute any such order in such subject security as provided in [paragraph (b)(2)](#b-2) of this section at its revised bid or offer in any amount up to its published quotation size or revised quotation size.
  - (4) **Subject to the provisions of paragraph (a)(4) of this section—**
    - (i) No national securities exchange or OTC market maker may make available, disseminate or otherwise communicate to any vendor, directly or indirectly, for display on a terminal or other display device any bid, offer, quotation size, or aggregate quotation size for any NMS security which is not a subject security with respect to such exchange or OTC market maker; and
    - (ii) No vendor may disseminate or display on a terminal or other display device any bid, offer, quotation size, or aggregate quotation size from any national securities exchange or OTC market maker for any NMS security which is not a subject security with respect to such exchange or OTC market maker.
  - (5)
    - (i) Entry of any priced order for an NMS security by an exchange market maker or OTC market maker in that security into an electronic communications network that widely disseminates such order shall be deemed to be:
      - (A) A bid or offer under this section, to be communicated to the market maker's exchange or association pursuant to this [paragraph (b)](#b) for at least the minimum quotation size that is required by the rules of the market maker's exchange or association if the priced order is for the account of a market maker, or the actual size of the order up to the minimum quotation size required if the priced order is for the account of a customer; and
      - (B) A communication of a bid or offer to a vendor for display on a display device for purposes of [paragraph (b)(4)](#b-4) of this section.
    - (ii) An exchange market maker or OTC market maker that has entered a priced order for an NMS security into an electronic communications network that widely disseminates such order shall be deemed to be in compliance with [paragraph (b)(5)(i)(A)](#b-5-i-A) of this section if the electronic communications network:
      - (A) (1) Provides to a national securities exchange or national securities association (or an exclusive processor acting on behalf of one or more exchanges or associations) the prices and sizes of the orders at the highest buy price and the lowest sell price for such security entered in, and widely disseminated by, the electronic communications network by exchange market makers and OTC market makers for the NMS security, and such prices and sizes are included in the quotation data made available by such exchange, association, or exclusive processor to vendors pursuant to this section; and

        (2) Provides, to any broker or dealer, the ability to effect a transaction with a priced order widely disseminated by the electronic communications network entered therein by an exchange market maker or OTC market maker that is:

        (i) Equivalent to the ability of any broker or dealer to effect a transaction with an exchange market maker or OTC market maker pursuant to the rules of the national securities exchange or national securities association to which the electronic communications network supplies such bids and offers; and

        (ii) At the price of the highest priced buy order or lowest priced sell order, or better, for the lesser of the cumulative size of such priced orders entered therein by exchange market makers or OTC market makers at such price, or the size of the execution sought by the broker or dealer, for such security; or

      - (B) **Is an alternative trading system that—** (1) Displays orders and provides the ability to effect transactions with such orders under [§ 242.301(b)(3)](/cfr/17/242.301.md?p=b-3); and

        (2) Otherwise is in compliance with Regulation ATS ([§ 242.300](/cfr/17/242.300.md) through [§ 242.303](/cfr/17/242.303.md)).

- (c) **Transactions in listed options.**
  - (1) **A national securities exchange or national securities association—**
    - (i) Shall not be required, under [paragraph (a)](#a) of this section, to collect from responsible brokers or dealers who are members of such exchange or association, or to make available to vendors, the quotation sizes and aggregate quotation sizes for listed options, if such exchange or association establishes by rule and periodically publishes the quotation size for which such responsible brokers or dealers are obligated to execute an order to buy or sell an options series that is a subject security at its published bid or offer under [paragraph (b)(2)](#b-2) of this section;
    - (ii) May establish by rule and periodically publish a quotation size, which shall not be for less than one contract, for which responsible brokers or dealers who are members of such exchange or association are obligated under [paragraph (b)(2)](#b-2) of this section to execute an order to buy or sell a listed option for the account of a broker or dealer that is in an amount different from the quotation size for which it is obligated to execute an order for the account of a customer; and
    - (iii) May establish and maintain procedures and mechanisms for collecting from responsible brokers and dealers who are members of such exchange or association, and making available to vendors, the quotation sizes and aggregate quotation sizes in listed options for which such responsible broker or dealer will be obligated under [paragraph (b)(2)](#b-2) of this section to execute an order from a customer to buy or sell a listed option and establish by rule and periodically publish the size, which shall not be less than one contract, for which such responsible brokers or dealers are obligated to execute an order for the account of a broker or dealer.
  - (2) If, pursuant to [paragraph (c)(1)](#c-1) of this section, the rules of a national securities exchange or national securities association do not require its members to communicate to it their quotation sizes for listed options, a responsible broker or dealer that is a member of such exchange or association shall:
    - (i) Be relieved of its obligations under [paragraph (b)(1)](#b-1) of this section to communicate to such exchange or association its quotation sizes for any listed option; and
    - (ii) Comply with its obligations under [paragraph (b)(2)](#b-2) of this section by executing any order to buy or sell a listed option, in an amount up to the size established by such exchange's or association's rules under [paragraph (c)(1)](#c-1) of this section.
  - (3) **Thirty second response.** Each responsible broker or dealer, within thirty seconds of receiving an order to buy or sell a listed option in an amount greater than the quotation size established by a national securities exchange's or national securities association's rules pursuant to [paragraph (c)(1)](#c-1) of this section, or its published quotation size must:
    - (i) Execute the entire order; or
    - (ii)
      - (A) **Execute that portion of the order equal to at least—** (1) The quotation size established by a national securities exchange's or national securities association's rules, pursuant to [paragraph (c)(1)](#c-1) of this section, to the extent that such exchange or association does not collect and make available to vendors quotation size and aggregate quotation size under [paragraph (a)](#a) of this section; or

        (2) Its published quotation size; and

      - (B) **Revise its bid or offer.**
  - (4) Notwithstanding [paragraph (c)(3)](#c-3) of this section, no responsible broker or dealer shall be obligated to execute a transaction for any listed option as provided in [paragraph (b)(2)](#b-2) of this section if:
    - (i) Any of the circumstances in [paragraph (b)(3)](#b-3) of this section exist; or
    - (ii) The order for the purchase or sale of a listed option is presented during a trading rotation in that listed option.
- (d) **Exemptions.** The Commission may exempt from the provisions of this section, either unconditionally or on specified terms and conditions, any responsible broker or dealer, electronic communications network, national securities exchange, or national securities association if the Commission determines that such exemption is consistent with the public interest, the protection of investors and the removal of impediments to and perfection of the mechanism of a national market system.

# §242.603. Distribution, consolidation, dissemination, and display of information with respect to quotations for and transactions in NMS stocks.

- (a) **Distribution of information.**
  - (1) Any exclusive processor, or any broker or dealer with respect to information for which it is the exclusive source, that distributes information with respect to quotations for or transactions in an NMS stock to a securities information processor shall do so on terms that are fair and reasonable.
  - (2) Any national securities exchange, national securities association, broker, or dealer that distributes information with respect to quotations for or transactions in an NMS stock to a securities information processor, broker, dealer, or other persons shall do so on terms that are not unreasonably discriminatory.
- (b) **Consolidation and dissemination of information.**
  - (1) **Application of paragraphs (b)(2) and (3) of this section—**
    - (i) Compliance with [paragraph (b)(3)](#b-3) of this section is required until the date indicated by the Commission in any order approving amendments to the effective national market system plan(s) to effectuate a cessation of the operations of the plan processors that disseminate consolidated information regarding NMS stocks.
    - (ii) Compliance with [paragraph (b)(2)](#b-2) of this section is required 180 calendar days from the date of the Commission's approval of the amendments, filed as required under [§ 242.614(e)](/cfr/17/242.614.md?p=e), to the effective national market system plan(s).
  - (2) Every national securities exchange on which an NMS stock is traded and national securities association shall act jointly pursuant to one or more effective national market system plans for the dissemination of consolidated market data. Every national securities exchange on which an NMS stock is traded and national securities association shall make available to all competing consolidators and self-aggregators its information with respect to quotations for and transactions in NMS stocks, including all data necessary to generate consolidated market data, in the same manner and using the same methods, including all methods of access and the same format, as such national securities exchange or national securities association makes available any information with respect to quotations for and transactions in NMS stocks to any person.
  - (3) Every national securities exchange on which an NMS stock is traded and national securities association shall act jointly pursuant to one or more effective national market system plans to disseminate consolidated information, including a national best bid and national best offer and odd-lot information, on quotations for and transactions in NMS stocks. Such plan or plans shall provide for the dissemination of all consolidated information for an individual NMS stock through a single plan processor and such single plan processor must represent quotation sizes in such consolidated information in terms of the number of shares, rounded down to the nearest multiple of a round lot. Every national securities exchange on which an NMS stock is traded and national securities association shall make available to a plan processor all data necessary to generate odd-lot information.
- (c) **Display of information.**
  - (1) No securities information processor, broker, or dealer shall provide, in a context in which a trading or order-routing decision can be implemented, a display of any information with respect to quotations for or transactions in an NMS stock without also providing, in an equivalent manner, a consolidated display for such stock.
  - (2) The provisions of [paragraph (c)(1)](#c-1) of this section shall not apply to a display of information on the trading floor or through the facilities of a national securities exchange or to a display in connection with the operation of a market linkage system implemented in accordance with an effective national market system plan.
- (d) **Exemptions.** The Commission, by order, may exempt from the provisions of this section, either unconditionally or on specified terms and conditions, any person, security, or item of information, or any class or classes of persons, securities, or items of information, if the Commission determines that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.

# §242.604. Display of customer limit orders.

- (a) **Specialists and OTC market makers.** For all NMS stocks:
  - (1) Each member of a national securities exchange that is registered by that exchange as a specialist, or is authorized by that exchange to perform functions substantially similar to that of a specialist, shall publish immediately a bid or offer that reflects:
    - (i) The price and the full size of each customer limit order held by the specialist that is at a price that would improve the bid or offer of such specialist in such security; and
    - (ii) **The full size of each customer limit order held by the specialist that—**
      - (A) Is priced equal to the bid or offer of such specialist for such security;
      - (B) Is priced equal to the national best bid or national best offer; and
      - (C) Represents more than a de minimis change in relation to the size associated with the specialist's bid or offer.
  - (2) Each registered broker or dealer that acts as an OTC market maker shall publish immediately a bid or offer that reflects:
    - (i) The price and the full size of each customer limit order held by the OTC market maker that is at a price that would improve the bid or offer of such OTC market maker in such security; and
    - (ii) **The full size of each customer limit order held by the OTC market maker that—**
      - (A) Is priced equal to the bid or offer of such OTC market maker for such security;
      - (B) Is priced equal to the national best bid or national best offer; and
      - (C) Represents more than a de minimis change in relation to the size associated with the OTC market maker's bid or offer.
- (b) **Exceptions.** The requirements in [paragraph (a)](#a) of this section shall not apply to any customer limit order:
  - (1) **That is executed upon receipt of the order.**
  - (2) That is placed by a customer who expressly requests, either at the time that the order is placed or prior thereto pursuant to an individually negotiated agreement with respect to such customer's orders, that the order not be displayed.
  - (3) **That is an odd-lot order.**
  - (4) **That is a block size order, unless a customer placing such order requests that the order be displayed.**
  - (5) That is delivered immediately upon receipt to a national securities exchange or national securities association-sponsored system, or an electronic communications network that complies with the requirements of [§ 242.602(b)(5)(ii)](/cfr/17/242.602.md?p=b-5-ii) with respect to that order.
  - (6) That is delivered immediately upon receipt to another exchange member or OTC market maker that complies with the requirements of this section with respect to that order.
  - (7) **That is an “all or none” order.**
- (c) **Exemptions.** The Commission may exempt from the provisions of this section, either unconditionally or on specified terms and conditions, any responsible broker or dealer, electronic communications network, national securities exchange, or national securities association if the Commission determines that such exemption is consistent with the public interest, the protection of investors and the removal of impediments to and perfection of the mechanism of a national market system.

# §242.605. Disclosure of order execution information.


This section requires market centers, brokers, and dealers to make available standardized, monthly reports of statistical information concerning their order executions. This information is presented in accordance with uniform standards that are based on broad assumptions about order execution and routing practices. The information will provide a starting point to promote visibility and competition on the part of market centers and broker-dealers, particularly on the factors of execution price and speed. The disclosures required by this section do not encompass all of the factors that may be important to investors in evaluating the order routing services of a broker-dealer. In addition, any particular market center, broker, or dealer's statistics will encompass varying types of orders routed by different broker-dealers on behalf of customers with a wide range of objectives. Accordingly, the statistical information required by this section alone does not create a reliable basis to address whether any particular broker-dealer failed to obtain the most favorable terms reasonably available under the circumstances for customer orders.

- (a) **Monthly electronic reports by market centers, brokers, and dealers.**
  - (1) Every market center, broker, or dealer shall make available for each calendar month, in accordance with the procedures established pursuant to [paragraph (a)(3)](#a-3) of this section, a report on the covered orders in NMS stocks that it received for execution from any person or that it received for execution in a prior calendar month but which remained open. Any OTC market maker that provides a trading system for only a single dealer to solely buy and sell securities against all other persons entering orders in that system shall produce a separate report pertaining only to covered orders entered in such trading system. Alternative trading systems (as defined in [§ 242.300(a)](/cfr/17/242.300.md?p=a)) shall prepare reports separately from their broker-dealer operators to the extent such entities are required to prepare reports. Each report shall be in electronic form; shall be categorized by security, order type, and order size; and shall include the following columns of information:
    - (i) For market orders, marketable limit orders, marketable immediate-or-cancel orders, midpoint-or-better limit orders, midpoint-or-better limit orders that are immediate-or-cancel, executable non-marketable limit orders, executable non-marketable limit orders that are immediate-or-cancel, executable market orders submitted with stop prices, executable stop marketable limit orders, and executable stop non-marketable limit orders:
      - (A) The number of covered orders;
      - (B) The cumulative notional value of covered orders;
      - (C) The cumulative number of shares of covered orders;
      - (D) The cumulative number of shares of covered orders cancelled prior to execution;
      - (E) The cumulative number of shares of covered orders executed at the receiving market center, broker, or dealer (excluding shares that the market center, broker, or dealer executes on a riskless principal basis);
      - (F) The cumulative number of shares of covered orders executed at any other venue;
      - (G) The cumulative number of shares of covered orders executed less than 100 microseconds after the time of order receipt; or, for non-marketable limit orders or orders submitted with stop prices, after the time the order becomes executable;
      - (H) The cumulative number of shares of covered orders executed from 100 microseconds to less than 1 millisecond after the time of order receipt; or, for non-marketable limit orders or orders submitted with stop prices, after the time the order becomes executable ;
      - (I) The cumulative number of shares of covered orders executed from 1 millisecond to less than 10 milliseconds after the time of order receipt; or, for non-marketable limit orders or orders submitted with stop prices, after the time the order becomes executable;
      - (J) The cumulative number of shares of covered orders executed from 10 milliseconds to less than 1 second after the time of order receipt; or, for non-marketable limit orders or orders submitted with stop prices, after the time the order becomes executable;
      - (K) The cumulative number of shares of covered orders executed from 1 second to less than 10 seconds after the time of order receipt; or, for non-marketable limit orders or orders submitted with stop prices, after the time the order becomes executable;
      - (L) The cumulative number of shares of covered orders executed from 10 seconds to less than 30 seconds after the time of order receipt; or, for non-marketable limit orders or orders submitted with stop prices, after the time the order becomes executable;
      - (M) The cumulative number of shares of covered orders executed from 30 seconds to less than 5 minutes after the time of order receipt; or, for non-marketable limit orders or orders submitted with stop prices, after the time the order becomes executable;
      - (N) The cumulative number of shares of covered orders executed 5 minutes or more after the time of order receipt; or, for non-marketable limit orders or orders submitted with stop prices, after the time the order becomes executable;
      - (O) For executions of covered orders, the average realized spread as calculated 50 milliseconds after the time of execution;
      - (P) For executions of covered orders, the average percentage realized spread as calculated 50 milliseconds after the time of execution;
      - (Q) For executions of covered orders, the average realized spread as calculated 1 second after the time of execution;
      - (R) For executions of covered orders, the average percentage realized spread as calculated 1 second after the time of execution;
      - (S) For executions of covered orders, the average realized spread as calculated 15 seconds after the time of execution;
      - (T) For executions of covered orders, the average percentage realized spread as calculated 15 seconds after the time of execution;
      - (U) For executions of covered orders, the average realized spread as calculated 1 minute after the time of execution;
      - (V) For executions of covered orders, the average percentage realized spread as calculated 1 minute after the time of execution;
      - (W) For executions of covered orders, the average realized spread as calculated 5 minutes after the time of execution;
      - (X) For executions of covered orders, the average percentage realized spread as calculated 5 minutes after the time of execution;
      - (Y) For executions of covered orders, the average midpoint; and
    - (ii) For market orders, marketable limit orders, marketable immediate-or-cancel orders, midpoint-or-better limit orders, midpoint-or-better limit orders that are immediate-or-cancel, executable market orders submitted with stop prices, and executable stop marketable limit orders:
      - (A) For executions of covered orders, the average quoted spread;
      - (B) For executions of covered orders, the average effective spread;
      - (C) For executions of covered orders, the average percentage effective spread;
      - (D) For executions of covered orders, the average effective divided by the average quoted spread, expressed as a percentage;
      - (E) The cumulative number of shares of covered orders executed with price improvement;
      - (F) For shares executed with price improvement, the share-weighted average amount per share that prices were improved;
      - (G) For shares executed with price improvement, the share-weighted average period from the time of order receipt to the time of order execution, expressed in increments of a millisecond or finer, or, in the case of midpoint-or-better limit orders, midpoint-or-better limit orders that are immediate-or-cancel, executable market orders submitted with stop prices, and executable stop marketable limit orders, from the time such orders first become executable to the time of order execution, expressed in increments of a millisecond or finer;
      - (H) The cumulative number of shares of covered orders executed at the quote;
      - (I) For shares executed at the quote, the share-weighted average period from the time of order receipt to the time of order execution, expressed in increments of a millisecond or finer, or, in the case of midpoint-or-better limit orders, midpoint-or-better limit orders that are immediate-or-cancel, executable market orders submitted with stop prices, and executable stop marketable limit orders, from the time such orders first become executable to the time of order execution, expressed in increments of a millisecond or finer;
      - (J) The cumulative number of shares of covered orders executed outside the quote;
      - (K) For shares executed outside the quote, the share-weighted average amount per share that prices were outside the quote;
      - (L) For shares executed outside the quote, the share-weighted average period from the time of order receipt, expressed in increments of a millisecond or finer, or, in the case of midpoint-or-better limit orders, midpoint-or-better limit orders that are immediate-or-cancel, executable market orders submitted with stop prices, and executable stop marketable limit orders, from the time such orders first become executable to the time of order execution, expressed in increments of a millisecond or finer;
      - (M) The cumulative number of shares of covered orders executed with price improvement relative to the best available displayed price;
      - (N) For shares executed with price improvement relative to the best available displayed price, the share-weighted average amount per share that prices were improved as compared to the best available displayed price;
      - (O) The cumulative number of shares of covered orders executed at the best available displayed price;
      - (P) The cumulative number of shares of covered orders executed outside the best available displayed price;
      - (Q) For shares executed outside the best available displayed price, the share-weighted average amount per share that prices were outside the best available displayed price;
      - (R) For executions of covered orders, the cumulative number of shares of the order size benchmark;
      - (S) **The sum of, for each execution of a covered order, the greater of—** the total number of shares executed with price improvement plus the total number of shares executed at the quote minus the order size benchmark, or zero; and
    - (iii) For midpoint-or-better limit orders, midpoint-or-better limit orders that are immediate-or-cancel, executable non-marketable limit orders, executable non-marketable limit orders that are immediate-or-cancel, and executable stop non-marketable limit orders:
      - (A) The number of covered orders that received either a complete or partial fill;
      - (B) The cumulative number of shares executed regular way at prices that could have filled the order while the order was in force, as reported pursuant to an effective transaction reporting plan or effective national market system plan. For each order, the share count shall be capped at the order size;
      - (C) The cumulative number of shares executed regular way on any national securities exchange at prices that could have filled the order while the order was in force, as reported pursuant to an effective transaction reporting plan or effective national market system plan. For each order, the share count shall be capped at the order size; and
      - (D) For shares executed, the share-weighted average period from the time the order becomes executable to the time of order execution expressed in increments of a millisecond or finer.
  - (2) Every market center, broker, or dealer shall make publicly available for each calendar month a report providing summary statistics on all covered orders that are market and marketable limit orders that it received for execution from any person. Such report shall be made available as an electronic file using the most recent version of the schema for comma separated values format (CSV) and the associated PDF renderer as published on the Commission's website for all reports required by this [paragraph (a)(2)](#a-2). Such report shall include a section for NMS stocks that are included in the S&P 500 Index as of the first day of that month and a section for other NMS stocks. Each section shall be categorized by order type (market orders or marketable limit orders) and order size (less than $250, $250 to less than $1,000, $1,000 to less than $5,000, $5,000 to less than $10,000, $10,000 to less than $20,000, $20,000 to less than $50,000, $50,000 to less than $200,000, $200,000 or more, and all order sizes combined, excluding orders with a notional value of $200,000 or more), and shall include the following columns of information:
    - (i) The average order size in shares;
    - (ii) The average notional order size;
    - (iii) For executions of covered orders, the average midpoint;
    - (iv) For executions of covered orders, the percentage of shares executed at the quote or better;
    - (v) For executions of covered orders, the percentage of shares that received price improvement;
    - (vi) For executions of covered orders, the share-weighted average percentage price improvement, calculated as the cumulative amount that prices were improved less the cumulative amount that prices were executed outside the quote divided by sum of the average midpoint times the number of shares executed;
    - (vii) For executions of covered orders, the average percentage effective spread;
    - (viii) For executions of covered orders, the average percentage quoted spread, calculated as the average quoted spread divided by the average midpoint for such orders;
    - (ix) For executions of covered orders, the average effective spread divided by the average quoted spread, expressed as a percentage;
    - (x) For executions of covered orders, the average percentage realized spread as calculated 15 seconds after the time of execution;
    - (xi) For executions of covered orders, the average percentage realized spread as calculated 1 minute after the time of execution; and
    - (xii) **For executions of covered orders, the share-weighted average execution speed, in milliseconds.**
  - (3) Every national securities exchange on which NMS stocks are traded and each national securities association shall act jointly in establishing procedures for market centers, brokers, and dealers to follow in making available to the public the reports required by this section in a uniform, readily accessible, and usable electronic form.
  - (4) In the event there is no effective national market system plan establishing such procedures, market centers, brokers, and dealers shall prepare their reports in a consistent, usable, and machine-readable electronic format, in accordance with the requirements in [paragraph (a)(1)](#a-1) of this section, and make such reports available for downloading from an internet website that is free and readily accessible to the public.
  - (5) Every market center, broker, or dealer shall keep the reports required by paragraphs [(a)(1)](#a-1) and [(2)](#a-2) of this section posted on an internet website that is free and readily accessible to the public for a period of three years from the initial date of posting on the internet website.
  - (6) A market center, broker, or dealer shall make available the reports required by paragraphs [(a)(1)](#a-1) and [(2)](#a-2) of this section within one month after the end of the month addressed in the reports.
  - (7) A broker or dealer that is not a market center shall not be subject to the requirements of this section unless that broker or dealer introduces or carries 100,000 or more customer accounts through which transactions are effected for the purchase or sale of NMS stocks (the “customer account threshold” for purposes of this paragraph). For purposes of this section, a broker or dealer that utilizes an omnibus clearing arrangement with respect to any of its underlying customer accounts shall be considered to carry such underlying customer accounts when calculating the number of customer accounts that it introduces or carries. Any broker or dealer that meets or exceeds this customer account threshold and is also a market center shall produce separate reports pertaining to each function. A broker or dealer that meets or exceeds the customer account threshold shall be required to produce reports pursuant to this section for at least three calendar months (“Reporting Period”). The Reporting Period shall begin the first calendar day of the next calendar month after the broker or dealer met or exceeded the customer account threshold, unless it is the first time the broker or dealer has met or exceeded the customer account threshold, in which case the Reporting Period shall begin the first calendar day four calendar months later. If, at any time after a broker or dealer has been required to produce reports pursuant to this section for at least a Reporting Period, a broker or dealer falls below the customer account threshold, the broker or dealer shall not be required to produce a report pursuant to this [paragraph (a)(7)](#a-7) for the next calendar month.
- (b) **Exemptions.** The Commission may, by order upon application, conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this section, if the Commission determines that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.

# §242.606. Disclosure of order routing information.

- (a) **Quarterly report on order routing.**
  - (1) Every broker or dealer shall make publicly available for each calendar quarter a report on its routing of non-directed orders in NMS stocks that are submitted on a held basis and of non-directed orders that are customer orders in NMS securities that are option contracts during that quarter broken down by calendar month and keep such report posted on an internet website that is free and readily accessible to the public for a period of three years from the initial date of posting on the internet website. Such report shall include a section for NMS stocks—separated by securities that are included in the S&P 500 Index as of the first day of that quarter and other NMS stocks—and a separate section for NMS securities that are option contracts. Such report shall be made available using the most recent versions of the XML schema and the associated PDF renderer as published on the Commission's website for all reports required by this section. Each section in a report shall include the following information:
    - (i) The percentage of total orders for the section that were non-directed orders, and the percentages of total non-directed orders for the section that were market orders, marketable limit orders, non-marketable limit orders, and other orders;
    - (ii) The identity of the ten venues to which the largest number of total non-directed orders for the section were routed for execution and of any venue to which five percent or more of non-directed orders were routed for execution, the percentage of total non-directed orders for the section routed to the venue, and the percentages of total non-directed market orders, total non-directed marketable limit orders, total non-directed non-marketable limit orders, and total non-directed other orders for the section that were routed to the venue;
    - (iii) For each venue identified pursuant to [paragraph (a)(1)(ii)](#a-1-ii) of this section, the net aggregate amount of any payment for order flow received, payment from any profit-sharing relationship received, transaction fees paid, and transaction rebates received, both as a total dollar amount and per share, for each of the following non-directed order types:
      - (A) Market orders;
      - (B) Marketable limit orders;
      - (C) Non-marketable limit orders; and
      - (D) **Other orders.**
    - (iv) A discussion of the material aspects of the broker's or dealer's relationship with each venue identified pursuant to [paragraph (a)(1)(ii)](#a-1-ii) of this section, including a description of any arrangement for payment for order flow and any profit-sharing relationship and a description of any terms of such arrangements, written or oral, that may influence a broker's or dealer's order routing decision including, among other things:
      - (A) Incentives for equaling or exceeding an agreed upon order flow volume threshold, such as additional payments or a higher rate of payment;
      - (B) Disincentives for failing to meet an agreed upon minimum order flow threshold, such as lower payments or the requirement to pay a fee;
      - (C) Volume-based tiered payment schedules; and
      - (D) **Agreements regarding the minimum amount of order flow that the broker-dealer would send to a venue.**
  - (2) A broker or dealer shall make the report required by [paragraph (a)(1)](#a-1) of this section publicly available within one month after the end of the quarter addressed in the report.
- (b) **Customer requests for information on order routing.**
  - (1) **Every broker or dealer shall, on request of a customer, disclose to its customer, for—**
    - (i) Orders in NMS stocks that are submitted on a held basis;
    - (ii) Orders in NMS stocks that are submitted on a not held basis and the broker or dealer is not required to provide the customer a report under [paragraph (b)(3)](#b-3) of this section; and
    - (iii) Orders in NMS securities that are option contracts, the identity of the venue to which the customer's orders were routed for execution in the six months prior to the request, whether the orders were directed orders or non-directed orders, and the time of the transactions, if any, that resulted from such orders. Such disclosure shall be made available using the most recent versions of the XML schema and the associated PDF renderer as published on the Commission's website for all reports required by this section.
  - (2) A broker or dealer shall notify customers in writing at least annually of the availability on request of the information specified in [paragraph (b)(1)](#b-1) of this section.
  - (3) Except as provided for in paragraphs [(b)(4)](#b-4) and [(5)](#b-5) of this section, every broker or dealer shall, on request of a customer that places, directly or indirectly, one or more orders in NMS stocks that are submitted on a not held basis with the broker or dealer, disclose to such customer within seven business days of receiving the request, a report on its handling of such orders for that customer for the prior six months by calendar month. Such report shall be made available using the most recent versions of the XML schema and the associated PDF renderer as published on the Commission's website for all reports required by this section. For purposes of such report, the handling of a NMS stock order submitted by a customer to a broker-dealer on a not held basis includes the handling of all child orders derived from that order. Such report shall be divided into two sections: One for directed orders and one for non-directed orders. Each section of such report shall include, with respect to such order flow sent by the customer to the broker or dealer, the total number of shares sent to the broker or dealer by the customer during the relevant period; the total number of shares executed by the broker or dealer as principal for its own account; the total number of orders exposed by the broker or dealer through an actionable indication of interest; and the venue or venues to which orders were exposed by the broker or dealer through an actionable indication of interest, provided that, where applicable, a broker or dealer must disclose that it exposed a customer's order through an actionable indication of interest to other customers but need not disclose the identity of such customers. Each section of such report also shall include the following columns of information for each venue to which the broker or dealer routed such orders for the customer, in the aggregate:
    - (i) **Information on Order Routing.**
      - (A) Total shares routed;
      - (B) Total shares routed marked immediate or cancel;
      - (C) Total shares routed that were further routable; and
      - (D) **Average order size routed.**
    - (ii) **Information on Order Execution.**
      - (A) Total shares executed;
      - (B) Fill rate (shares executed divided by the shares routed);
      - (C) Average fill size;
      - (D) Average net execution fee or rebate (cents per 100 shares, specified to four decimal places);
      - (E) Total number of shares executed at the midpoint;
      - (F) Percentage of shares executed at the midpoint;
      - (G) Total number of shares executed that were priced on the side of the spread more favorable to the order;
      - (H) Percentage of total shares executed that were priced at the side of the spread more favorable to the order;
      - (I) Total number of shares executed that were priced on the side of the spread less favorable to the order; and
      - (J) Percentage of total shares executed that were priced on the side of the spread less favorable to the order.
    - (iii) **Information on Orders that Provided Liquidity.**
      - (A) Total number of shares executed of orders providing liquidity;
      - (B) Percentage of shares executed of orders providing liquidity;
      - (C) Average time between order entry and execution or cancellation, for orders providing liquidity (in milliseconds); and
      - (D) Average net execution rebate or fee for shares of orders providing liquidity (cents per 100 shares, specified to four decimal places).
    - (iv) **Information on Orders that Removed Liquidity.**
      - (A) Total number of shares executed of orders removing liquidity;
      - (B) Percentage of shares executed of orders removing liquidity; and
      - (C) Average net execution fee or rebate for shares of orders removing liquidity (cents per 100 shares, specified to four decimal places).
  - (4) Except as provided below, no broker or dealer shall be required to provide reports pursuant to [paragraph (b)(3)](#b-3) of this section if the percentage of shares of not held orders in NMS stocks the broker or dealer received from its customers over the prior six calendar months was less than five percent of the total shares in NMS stocks the broker or dealer received from its customers during that time (the “five percent threshold” for purposes of this paragraph). A broker or dealer that equals or exceeds this five percent threshold shall be required (subject to [paragraph (b)(5)](#b-5) of this section) to provide reports pursuant to [paragraph (b)(3)](#b-3) of this section for at least six calendar months (“Compliance Period”) regardless of the percentage of shares of not held orders in NMS stocks the broker or dealer receives from its customers during the Compliance Period. The Compliance Period shall begin the first calendar day of the next calendar month after the broker or dealer equaled or exceeded the five percent threshold, unless it is the first time the broker or dealer has equaled or exceeded the five percent threshold, in which case the Compliance Period shall begin the first calendar day four calendar months later. A broker or dealer shall not be required to provide reports pursuant to [paragraph (b)(3)](#b-3) of this section for orders that the broker or dealer did not receive during a Compliance Period. If, at any time after the end of a Compliance Period, the percentage of shares of not held orders in NMS stocks the broker or dealer received from its customers was less than five percent of the total shares in NMS stocks the broker or dealer received from its customers over the prior six calendar months, the broker or dealer shall not be required to provide reports pursuant to [paragraph (b)(3)](#b-3) of this section, except for orders that the broker or dealer received during the portion of a Compliance Period that remains covered by [paragraph (b)(3)](#b-3) of this section.
  - (5) No broker or dealer shall be subject to the requirements of [paragraph (b)(3)](#b-3) of this section with respect to a customer that traded on average each month for the prior six months less than $1,000,000 of notional value of not held orders in NMS stocks through the broker or dealer.
- (c) **Exemptions.** The Commission may, by order upon application, conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this section, if the Commission determines that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.

# §242.607. Customer account statements.

- (a) No broker or dealer acting as agent for a customer may effect any transaction in, induce or attempt to induce the purchase or sale of, or direct orders for purchase or sale of, any NMS stock or a security authorized for quotation on an automated inter-dealer quotation system that has the characteristics set forth in section 17B of the Act ([15 U.S.C. 78q-2](/usc/15/78q-2.md)), unless such broker or dealer informs such customer, in writing, upon opening a new account and on an annual basis thereafter, of the following:
  - (1) The broker's or dealer's policies regarding receipt of payment for order flow from any broker or dealer, national securities exchange, national securities association, or exchange member to which it routes customers' orders for execution, including a statement as to whether any payment for order flow is received for routing customer orders and a detailed description of the nature of the compensation received; and
  - (2) The broker's or dealer's policies for determining where to route customer orders that are the subject of payment for order flow absent specific instructions from customers, including a description of the extent to which orders can be executed at prices superior to the national best bid and national best offer.
- (b) **Exemptions.** The Commission, upon request or upon its own motion, may exempt by rule or by order, any broker or dealer or any class of brokers or dealers, security or class of securities from the requirements of [paragraph (a)](#a) of this section with respect to any transaction or class of transactions, either unconditionally or on specified terms and conditions, if the Commission determines that such exemption is consistent with the public interest and the protection of investors.

# §242.608. Filing and amendment of national market system plans.

- (a) **Filing of national market system plans and amendments thereto.**
  - (1) Any two or more self-regulatory organizations, acting jointly, may file a national market system plan or may propose an amendment to an effective national market system plan (“proposed amendment”) by submitting the text of the plan or amendment to the Commission by email, together with a statement of the purpose of such plan or amendment and, to the extent applicable, the documents and information required by paragraphs [(a)(4)](#a-4) and [(5)](#a-5) of this section.
  - (2) The Commission may propose amendments to any effective national market system plan by publishing the text thereof, together with a statement of the purpose of such amendment, in accordance with the provisions of [paragraph (b)](#b) of this section.
  - (3) **Self-regulatory organizations are authorized to act jointly in—**
    - (i) Planning, developing, and operating any national market subsystem or facility contemplated by a national market system plan;
    - (ii) Preparing and filing a national market system plan or any amendment thereto; or
    - (iii) **Implementing or administering an effective national market system plan.**
  - (4) Every national market system plan filed pursuant to this section, or any amendment thereto, shall be accompanied by:
    - (i) Copies of all governing or constituent documents relating to any person (other than a self-regulatory organization) authorized to implement or administer such plan on behalf of its sponsors; and
    - (ii) **To the extent applicable—**
      - (A) A detailed description of the manner in which the plan or amendment, and any facility or procedure contemplated by the plan or amendment, will be implemented;
      - (B) A listing of all significant phases of development and implementation (including any pilot phase) contemplated by the plan or amendment, together with the projected date of completion of each phase;
      - (C) An analysis of the impact on competition of implementation of the plan or amendment or of any facility contemplated by the plan or amendment;
      - (D) A description of any written understandings or agreements between or among plan sponsors or participants relating to interpretations of the plan or conditions for becoming a sponsor or participant in the plan; and
      - (E) In the case of a proposed amendment, a statement that such amendment has been approved by the sponsors in accordance with the terms of the plan.
  - (5) Every national market system plan, or any amendment thereto, filed pursuant to this section shall include a description of the manner in which any facility contemplated by the plan or amendment will be operated. Such description shall include, to the extent applicable:
    - (i) The terms and conditions under which brokers, dealers, and/or self-regulatory organizations will be granted or denied access (including specific procedures and standards governing the granting or denial of access);
    - (ii) The method by which any fees or charges collected on behalf of all of the sponsors and/or participants in connection with access to, or use of, any facility contemplated by the plan or amendment will be determined and imposed (including any provision for distribution of any net proceeds from such fees or charges to the sponsors and/or participants) and the amount of such fees or charges;
    - (iii) The method by which, and the frequency with which, the performance of any person acting as plan processor with respect to the implementation and/or operation of the plan will be evaluated; and
    - (iv) The method by which disputes arising in connection with the operation of the plan will be resolved.
  - (6) In connection with the selection of any person to act as plan processor with respect to any facility contemplated by a national market system plan (including renewal of any contract for any person to so act), the sponsors shall file with the Commission a statement identifying the person selected, describing the material terms under which such person is to serve as plan processor, and indicating the solicitation efforts, if any, for alternative plan processors, the alternatives considered and the reasons for selection of such person.
  - (7) Any national market system plan (or any amendment thereto) which is intended by the sponsors to satisfy a plan filing requirement contained in any other section of this Regulation NMS and [part 240](/cfr/17/part240.md), [subpart A](/cfr/17/subpartA.md) of this chapter shall, in addition to compliance with this section, also comply with the requirements of such other section.
  - (8)
    - (i) A participant in an effective national market system plan shall ensure that a current and complete version of the plan is posted on a plan website or on a website designated by plan participants within two business days after notification by the Commission of effectiveness of the plan. Each participant in an effective national market system plan shall ensure that such website is updated to reflect amendments to such plan within two business days after the plan participants have been notified by the Commission of its approval of a proposed amendment pursuant to [paragraph (b)](#b) of this section. If the amendment is not effective for a certain period, the plan participants shall clearly indicate the effective date in the relevant text of the plan. Each plan participant also shall provide a link on its own website to the website with the current version of the plan.
    - (ii) The plan participants shall ensure that any proposed amendments filed pursuant to [paragraph (a)](#a) of this section are posted on a plan website or a designated website no later than two business days after the filing of the proposed amendments with the Commission. If the plan participants do not post a proposed amendment on a plan website or a designated website on the same business day that they file such proposed amendment with the Commission, then the plan participants shall inform the Commission of the business day on which they posted such proposed amendment on a plan website or a designated website. The plan participants shall maintain any proposed amendment to the plan on a plan website or a designated website until the Commission approves the plan amendment and the plan participants update the website to reflect such amendment or the plan participants withdraw the proposed amendment or the plan participants are notified pursuant to [paragraph (b)(1)(iii)](#b-1-iii) of this section that the proposed amendment is not filed in compliance with requirements or the Commission disapproves the proposed amendment. If the plan participants withdraw a proposed amendment or are notified pursuant to [paragraph (b)(1)(iii)](#b-1-iii) of this section that a proposed amendment is not filed in compliance with requirements or the Commission disapproves a proposed amendment, the plan participants shall remove such amendment from the plan website or designated website within two business days of withdrawal, notification of non-compliant filing or disapproval. Each plan participant shall provide a link to the website with the current version of the plan.
- (b) **Effectiveness of national market system plans.**
  - (1) The Commission shall publish notice of the filing of any national market system plan, or any proposed amendment to any effective national market system plan (including any amendment initiated by the Commission), together with the terms of substance of the filing or a description of the subjects and issues involved, and shall provide interested persons an opportunity to submit written comments. No national market system plan, or any amendment thereto, shall become effective unless approved by the Commission or otherwise permitted in accordance with [paragraph (b)(3)](#b-3) of this section.
    - (i) **Publication of national market system plans.** The Commission shall send the notice of the filing of a national market system plan to the Federal Register for publication thereof under this [paragraph (b)(1)](#b-1) within 90 days of the business day on which such plan was filed with the Commission pursuant to [paragraph (a)](#a) of this section. If the Commission fails to send the notice to the Federal Register for publication thereof within such 90-day period, then the date of publication shall be deemed to be the last day of such 90-day period.
    - (ii) **Publication of proposed amendments.** The Commission shall send the notice of the filing of a proposed amendment to the Federal Register for publication thereof under this [paragraph (b)(1)](#b-1) within 15 days of the business day on which such proposed amendment was posted on a plan website or a website designated by plan participants pursuant to [paragraph (a)](#a) of this section after being filed with the Commission pursuant to [paragraph (a)](#a) of this section. If the Commission fails to send the notice to the Federal Register for publication thereof within such 15-day period, then the date of publication shall be deemed to be the business day on which such website posting was made.
    - (iii) A national market system plan or proposed amendment has not been filed with the Commission for purposes of this [paragraph (b)(1)](#b-1) if, not later than 7 business days after the business day of receipt by the Commission, the Commission notifies the plan participants that the filing of the national market system plan or proposed amendment does not comply with [paragraph (a)](#a) of this section or plan filing requirements in other sections of Regulation NMS and [part 240](/cfr/17/part240.md), [subpart A](/cfr/17/subpartA.md) of this chapter, except that if the Commission determines that the plan or amendment is unusually lengthy and is complex or raises novel regulatory issues, the Commission shall inform the plan participants of such determination not later than 7 business days after the business day of receipt by the Commission and, for purposes of this [paragraph (b)(1)](#b-1), the filing of such plan or amendment has not been made with the Commission if, not later than 21 days after the business day of receipt by the Commission, the Commission notifies the plan participants that the filing of such plan or amendment does not comply with [paragraph (a)](#a) of this section or plan filing requirements in other sections of Regulation NMS and [part 240](/cfr/17/part240.md), [subpart A](/cfr/17/subpartA.md) of this chapter.
    - (iv) For purposes of this section, a “business day” is any day other than a Saturday, Sunday, Federal holiday, a day that the Office of Personnel Management has announced that Federal agencies in the Washington, DC area are closed to the public, a day on which the Commission is subject to a Federal government shutdown or a day on which the Commission's Washington, DC office is otherwise not open for regular business; provided further, a filing received by the Commission or a website posting made at or before 5:30 p.m. Eastern Standard Time or Eastern Daylight Saving Time, whichever is currently in effect, on a business day, shall be deemed received or made on that business day, and a filing received by the Commission or a website posting made after 5:30 p.m. Eastern Standard Time or Eastern Daylight Saving Time, whichever is currently in effect, shall be deemed received or made on the next business day.
  - (2) The Commission shall approve a national market system plan or proposed amendment to an effective national market system plan, with such changes or subject to such conditions as the Commission may deem necessary or appropriate, if it finds that such plan or amendment is necessary or appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanisms of, a national market system, or otherwise in furtherance of the purposes of the Act. The Commission shall disapprove a national market system plan or proposed amendment if it does not make such a finding. Approval or disapproval of a national market system plan, or an amendment to an effective national market system plan (other than an amendment initiated by the Commission), shall be by order. Promulgation of an amendment to an effective national market system plan initiated by the Commission shall be by rule.
    - (i) Within 90 days of the date of publication of notice of the filing of a national market system plan or proposed amendment, or within such longer period as to which the plan participants consent, the Commission shall, by order, approve or disapprove the plan or amendment, or institute proceedings to determine whether the plan or amendment should be disapproved. Proceedings to determine whether the plan or amendment should be disapproved will be conducted pursuant to 17 CFR [201.700](/cfr/17/201.700.md) and [201.701](/cfr/17/201.701.md). Such proceedings shall include notice of the grounds for disapproval under consideration and opportunity for hearing and shall be concluded within 180 days of the date of publication of notice of the plan or amendment. At the conclusion of such proceedings the Commission shall, by order, approve or disapprove the plan or amendment. The time for conclusion of such proceedings may be extended for up to 60 days (up to 240 days from the date of notice publication) if the Commission determines that a longer period is appropriate and publishes the reasons for such determination or the plan participants consent to the longer period.
    - (ii) The time for conclusion of proceedings to determine whether a national market system plan or proposed amendment should be disapproved may be extended for an additional period up to 60 days beyond the period set forth in [paragraph (b)(2)(i)](#b-2-i) of this section (up to 300 days from the date of notice publication) if the Commission determines that a longer period is appropriate and publishes the reasons for such determination or the plan participants consent to the longer period.
  - (3) A proposed amendment may be put into effect upon filing with the Commission if designated by the sponsors as:
    - (i) [Reserved]
    - (ii) Concerned solely with the administration of the plan, or involving the governing or constituent documents relating to any person (other than a self-regulatory organization) authorized to implement or administer such plan on behalf of its sponsors; or
    - (iii) **Involving solely technical or ministerial matters.** At any time within 60 days of the filing of any such amendment, the Commission may summarily abrogate the amendment and require that such amendment be refiled in accordance with [paragraph (a)(1)](#a-1) of this section and reviewed in accordance with [paragraph (b)(2)](#b-2) of this section, if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanisms of, a national market system or otherwise in furtherance of the purposes of the Act.
  - (4) Notwithstanding the provisions of [paragraph (b)(1)](#b-1) of this section, a proposed amendment may be put into effect summarily upon publication of notice of such amendment, on a temporary basis not to exceed 120 days, if the Commission finds that such action is necessary or appropriate in the public interest, for the protection of investors or the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanisms of, a national market system or otherwise in furtherance of the purposes of the Act.
  - (5) **Any plan (or amendment thereto) in connection with—**
    - (i) The planning, development, operation, or regulation of a national market system (or a subsystem thereof) or one or more facilities thereof; or
    - (ii) The development and implementation of procedures and/or facilities designed to achieve compliance by self-regulatory organizations and/or their members of any section of this Regulation NMS ([§§ 242.600 through 242.612](/cfr/17/242.600..242.612.md)) and [part 240](/cfr/17/part240.md), [subpart A](/cfr/17/subpartA.md) of this chapter promulgated pursuant to section 11A of the Act ([15 U.S.C. 78k-1](/usc/15/78k-1.md)), approved by the Commission pursuant to section 11A of the Act (or pursuant to any rule or regulation thereunder) prior to the effective date of this section (either temporarily or permanently) shall be deemed to have been filed and approved pursuant to this section and no additional filing need be made by the sponsors with respect to such plan or amendment; provided, however, that all terms and conditions associated with any such approval (including time limitations) shall continue to be applicable; provided, further, that any amendment to such plan filed with or approved by the Commission on or after the effective date of this section shall be subject to the provisions of, and considered in accordance with the procedures specified in, this section.
- (c) **Compliance with terms of national market system plans.** Each self-regulatory organization shall comply with the terms of any effective national market system plan of which it is a sponsor or a participant. Each self-regulatory organization also shall, absent reasonable justification or excuse, enforce compliance with any such plan by its members and persons associated with its members.
- (d) **Appeals.** The Commission may, in its discretion, entertain appeals in connection with the implementation or operation of any effective national market system plan as follows:
  - (1) Any action taken or failure to act by any person in connection with an effective national market system plan (other than a prohibition or limitation of access reviewable by the Commission pursuant to [section 11A(b)(5)](/cfr/17/11A.md?p=b-5) or section 19(d) of the Act (15 U.S.C. [78k-1(b)(5)](/usc/15/78k-1.md?p=b-5) or [78s(d)](/usc/15/78s.md?p=d))) shall be subject to review by the Commission, on its own motion or upon application by any person aggrieved thereby (including, but not limited to, self-regulatory organizations, brokers, dealers, issuers, and vendors), filed not later than 30 days after notice of such action or failure to act or within such longer period as the Commission may determine.
  - (2) Application to the Commission for review, or the institution of review by the Commission on its own motion, shall not operate as a stay of any such action unless the Commission determines otherwise, after notice and opportunity for hearing on the question of a stay (which hearing may consist only of affidavits or oral arguments).
  - (3) In any proceedings for review, if the Commission, after appropriate notice and opportunity for hearing (which hearing may consist solely of consideration of the record of any proceedings conducted in connection with such action or failure to act and an opportunity for the presentation of reasons supporting or opposing such action or failure to act) and upon consideration of such other data, views, and arguments as it deems relevant, finds that the action or failure to act is in accordance with the applicable provisions of such plan and that the applicable provisions are, and were, applied in a manner consistent with the public interest, the protection of investors, the maintenance of fair and orderly markets, and the removal of impediments to, and the perfection of the mechanisms of a national market system, the Commission, by order, shall dismiss the proceeding. If the Commission does not make any such finding, or if it finds that such action or failure to act imposes any burden on competition not necessary or appropriate in furtherance of the purposes of the Act, the Commission, by order, shall set aside such action and/or require such action with respect to the matter reviewed as the Commission deems necessary or appropriate in the public interest, for the protection of investors, and the maintenance of fair and orderly markets, or to remove impediments to, and perfect the mechanisms of, a national market system.
- (e) **Exemptions.** The Commission may exempt from the provisions of this section, either unconditionally or on specified terms and conditions, any self-regulatory organization, member thereof, or specified security, if the Commission determines that such exemption is consistent with the public interest, the protection of investors, the maintenance of fair and orderly markets and the removal of impediments to, and perfection of the mechanisms of, a national market system.

# §242.609. Registration of securities information processors: form of application and amendments.

- (a) An application for the registration of a securities information processor shall be filed on Form SIP ([§ 249.1001](/cfr/17/249.1001.md) of this chapter) in accordance with the instructions contained therein.
- (b) If any information reported in items 1-13 or item 21 of Form SIP or in any amendment thereto is or becomes inaccurate for any reason, whether before or after the registration has been granted, the securities information processor shall promptly file an amendment on Form SIP correcting such information.
- (c) The Commission, upon its own motion or upon application by any securities information processor, may conditionally or unconditionally exempt any securities information processor from any provision of the rules or regulations adopted under section 11A(b) of the Act ([15 U.S.C. 78k-1(b)](/usc/15/78k-1.md?p=b)).
- (d) Every amendment filed pursuant to this section shall constitute a “report” within the meaning of sections 17(a), 18(a) and 32(a) of the Act (15 U.S.C. [78q(a)](/usc/15/78q.md?p=a), [78r(a)](/usc/15/78r.md?p=a), and [78ff(a)](/usc/15/78ff.md?p=a)).

# §242.610. Access to quotations.

- (a) **Quotations of SRO trading facility.** A national securities exchange or national securities association shall not impose unfairly discriminatory terms that prevent or inhibit any person from obtaining efficient access through a member of the national securities exchange or national securities association to the quotations in an NMS stock displayed through its SRO trading facility.
- (b) **Quotations of SRO display-only facility.**
  - (1) Any trading center that displays quotations in an NMS stock through an SRO display-only facility shall provide a level and cost of access to such quotations that is substantially equivalent to the level and cost of access to quotations displayed by SRO trading facilities in that stock.
  - (2) Any trading center that displays quotations in an NMS stock through an SRO display-only facility shall not impose unfairly discriminatory terms that prevent or inhibit any person from obtaining efficient access to such quotations through a member, subscriber, or customer of the trading center.
- (c) **Fees for access to quotations.** A trading center shall not impose, nor permit to be imposed, any fee or fees for the execution of an order against a protected quotation of the trading center or against any other quotation of the trading center that is the best bid or best offer of a national securities exchange or the best bid or best offer of a national securities association in an NMS stock that exceed or accumulate to more than the following limits:
  - (1) If the price of a protected quotation or other quotation is $1.00 or more, the fee or fees cannot exceed or accumulate to more than $0.001 per share; or
  - (2) If the price of a protected quotation or other quotation is less than $1.00, the fee or fees cannot exceed or accumulate to more than 0.1% of the quotation price per share.
- (d) **Transparency of fees.** A national securities exchange shall not impose, nor permit to be imposed, any fee or fees, or provide, or permit to be provided, any rebate or other remuneration, for the execution of an order in an NMS stock that cannot be determined at the time of execution.
- (e) **Locking or crossing quotations.** Each national securities exchange and national securities association shall establish, maintain, and enforce written rules that:
  - (1) **Require its members reasonably to avoid—**
    - (i) Displaying quotations that lock or cross any protected quotation in an NMS stock; and
    - (ii) Displaying manual quotations that lock or cross any quotation in an NMS stock disseminated pursuant to an effective national market system plan;
  - (2) Are reasonably designed to assure the reconciliation of locked or crossed quotations in an NMS stock; and
  - (3) Prohibit its members from engaging in a pattern or practice of displaying quotations that lock or cross any protected quotation in an NMS stock, or of displaying manual quotations that lock or cross any quotation in an NMS stock disseminated pursuant to an effective national market system plan, other than displaying quotations that lock or cross any protected or other quotation as permitted by an exception contained in its rules established pursuant to [paragraph (e)(1)](#e-1) of this section.
- (f) **Exemptions.** The Commission, by order, may exempt from the provisions of this section, either unconditionally or on specified terms and conditions, any person, security, quotations, orders, or fees, or any class or classes of persons, securities, quotations, orders, or fees, if the Commission determines that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.

# §242.611. Order protection rule.

- (a) **Reasonable policies and procedures.**
  - (1) A trading center shall establish, maintain, and enforce written policies and procedures that are reasonably designed to prevent trade-throughs on that trading center of protected quotations in NMS stocks that do not fall within an exception set forth in [paragraph (b)](#b) of this section and, if relying on such an exception, that are reasonably designed to assure compliance with the terms of the exception.
  - (2) A trading center shall regularly surveil to ascertain the effectiveness of the policies and procedures required by [paragraph (a)(1)](#a-1) of this section and shall take prompt action to remedy deficiencies in such policies and procedures.
- (b) **Exceptions.**
  - (1) The transaction that constituted the trade-through was effected when the trading center displaying the protected quotation that was traded through was experiencing a failure, material delay, or malfunction of its systems or equipment.
  - (2) **The transaction that constituted the trade-through was not a “regular way” contract.**
  - (3) The transaction that constituted the trade-through was a single-priced opening, reopening, or closing transaction by the trading center.
  - (4) The transaction that constituted the trade-through was executed at a time when a protected bid was priced higher than a protected offer in the NMS stock.
  - (5) The transaction that constituted the trade-through was the execution of an order identified as an intermarket sweep order.
  - (6) The transaction that constituted the trade-through was effected by a trading center that simultaneously routed an intermarket sweep order to execute against the full displayed size of any protected quotation in the NMS stock that was traded through.
  - (7) The transaction that constituted the trade-through was the execution of an order at a price that was not based, directly or indirectly, on the quoted price of the NMS stock at the time of execution and for which the material terms were not reasonably determinable at the time the commitment to execute the order was made.
  - (8) The trading center displaying the protected quotation that was traded through had displayed, within one second prior to execution of the transaction that constituted the trade-through, a best bid or best offer, as applicable, for the NMS stock with a price that was equal or inferior to the price of the trade-through transaction.
  - (9) The transaction that constituted the trade-through was the execution by a trading center of an order for which, at the time of receipt of the order, the trading center had guaranteed an execution at no worse than a specified price (a “stopped order”), where:
    - (i) The stopped order was for the account of a customer;
    - (ii) The customer agreed to the specified price on an order-by-order basis; and
    - (iii) The price of the trade-through transaction was, for a stopped buy order, lower than the national best bid in the NMS stock at the time of execution or, for a stopped sell order, higher than the national best offer in the NMS stock at the time of execution.
- (c) **Intermarket sweep orders.** The trading center, broker, or dealer responsible for the routing of an intermarket sweep order shall take reasonable steps to establish that such order meets the requirements set forth in [§ 242.600(b)(47)](/cfr/17/242.600.md?p=b-47).
- (d) **Exemptions.** The Commission, by order, may exempt from the provisions of this section, either unconditionally or on specified terms and conditions, any person, security, transaction, quotation, or order, or any class or classes of persons, securities, quotations, or orders, if the Commission determines that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.

# §242.612. Minimum pricing increment.

- (a) **Definitions.** For purposes of this section only, the following terms shall have the meanings set forth in this section.
  - (1) **Evaluation Period—** means:
    - (i) The three months from January through March of a calendar year; and
    - (ii) The three months from July through September of a calendar year during which the Time Weighted Average Quoted Spread of an NMS stock shall be measured by the primary listing exchange to determine the minimum pricing increment for each NMS stock.
  - (2) Time Weighted Average Quoted Spread means the average dollar value difference between the NBB and NBO during regular trading hours where each instance of a unique NBB and NBO is weighted by the length of time that the quote prevailed as the NBB or NBO.
- (b) **Minimum pricing increments.**
  - (1) The minimum pricing increment under [paragraph (b)(2)](#b-2) of this section shall be operative on:
    - (i) The first business day of May for the Evaluation Period from January through March and continue through the last business day of October of the calendar year; and
    - (ii) The first business day of November for the Evaluation Period from July through September and continue through the last business day of April of the next calendar year.
  - (2) No national securities exchange, national securities association, alternative trading system, vendor, or broker or dealer shall display, rank, or accept from any person a bid or offer, an order, or an indication of interest in any NMS stock in an increment smaller than required pursuant to either paragraph [(b)(2)(i)](#b-2-i) or [(ii)](#b-2-ii) of this section if that bid or offer, order, or indication of interest is priced equal to or greater than $1.00 per share:
    - (i) $0.01, if the Time Weighted Average Quoted Spread for the NMS stock during the Evaluation Period was greater than, $0.015; or
    - (ii) $0.005, if the Time Weighted Average Quoted Spread for the NMS stock during the Evaluation Period was equal to or less than $0.015.
  - (3) No national securities exchange, national securities association, alternative trading system, vendor, or broker or dealer shall display, rank, or accept from any person a bid or offer, an order, or an indication of interest in any NMS stock priced in an increment smaller than $0.0001 if that bid or offer, order, or indication of interest is priced less than $1.00 per share.
- (c) **New NMS Stocks.** Any security that becomes an NMS Stock during an operative period as described in [paragraph (b)(1)](#b-1) of this section shall be assigned a minimum pricing increment of $0.01 for bids or offers, orders, or indications of interest priced equal to or greater than $1.00 per share.
- (d) **Exemptions.** The Commission, by order, may exempt from the provisions of this section, either unconditionally or on specified terms and conditions, any person, security, quotation, or order, or any class or classes of persons, securities, quotations, or orders, if the Commission determines that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.