Securities Lawyer's Deskbook                          published by The University of Cincinnati College of Law

Rule 604 -- Display of Customer Limit Orders

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1. 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:
      
      
      1. 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
         
         
      2. The full size of each customer limit order held by the specialist that:
         
         
         1. Is priced equal to the bid or offer of such specialist for such security;
            
            
         2. Is priced equal to the national best bid or national best offer; and
            
            
         3. 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:
      
      
      1. 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
         
         
      2. The full size of each customer limit order held by the OTC market maker that:
         
         
         
         
         1. Is priced equal to the bid or offer of such OTC market maker for such security;
            
            
         2. Is priced equal to the national best bid or national best offer; and
            
            
         3. Represents more than a de minimis change in relation to the size associated with the OTC market maker’s bid or offer.
            
            
2. Exceptions. The requirements in paragraph (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 Rule 242.602(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.
      
      
3. 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.
   
   

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