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What You Need To Know About Market Makers And Rule 15c211?


A market maker is a company or firm that stands ready to participate in the buying or selling of a particular stock on a continuous or regular basis at a price quoted publicly. Market makers are usually involved in the context of the NYSE, NASDAQ, or other over-the-counter markets. Generally, market makers must be ready to buy and sell a minimum of 100 shares of stocks they are making a market in.

As a result, a number of market makers may have to file a large order from investors at potentially different prices.

Market Maker Registration:

All broker dealers who want to be registered as a market maker must first file their application with the National Association of Securities Dealers (NASD) and prove that they are in good standing with the NASD and that their firm meets all the capital requirements to be qualified as a market maker.

The registration will only take effect upon NASD’s notification. Once approved, the broker dealer must then register in each of the securities it wishes to make its market in, before he or she could quote that security. No consideration from the promoter or the issuer may be given to broker dealers for making their market in the security.

As a result of the recent order handling rules from Securities and Exchange Commission (SEC), all market makers are considered as primary market makers and are exempted from the short sale rule of the NASDAQ.

Market Maker Registration in an OTC BB Security:

Securities quoted in the OTCBB security are not required to fulfill any listing requirements and may be quoted by any broker dealers registered as over-the-counter market makers. However, as per the SEC Rule 15c211, market makers must acquire detailed information about the issuer.

What is Rule 15c211?

The Securities and Exchange Commission designed the Rule 15c211 to allow the securities of non-reporting public companies quoted on the “FINRA” “OTCBB” or “The Financial Industry Regulatory Authority” “Over-the-Counter Bulletin Board,” to file some simple disclosures. Now, companies that want to acquire a FINRA OTCBB quote are required to file their reports with the SEC.

Under the amended Section 15 of the 1934 Securities Exchange Act, a company that has filed its registered offering such as the S-1 registration statement must file reports for a year. Under the Section 12g of the 1934 Securities Exchange Act, a company that files a Form 10-12G or Form 10 becomes a reporting company and is required to file reports.

To qualify for a securities quotation, the market maker of the company must file a Form 211 with FINRA, and the company must have enough free trading stocks in its public float to allow the Rule 15c211.

The FINRA OTCBB unstated and stated listing requirements are as follows:

* Fully reporting with the SEC;
* At least 40 stockholders with a minimum record holding of 100 shares each;
* A market maker must have submitted the Form 211 or 15c211 application to FINRA and must agree to act or serve as the market maker for the company’s securities

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