Stock Market Maker Rules to Halt Stub Quotes Take Effect Today
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Quoting obligations aimed at improving prices in equity markets take effect today as part of regulators’ attempt to prevent a repeat of the May 6 crash.
The rules require market makers to submit bids and offers within 8 percent of the prevailing price for the biggest U.S. stocks. They ban stub quotes, or placeholder requests that range from pennies to thousands of dollars that were adopted in response to rules requiring traders to maintain bids and offers. Stub quotes resulted in a “significant proportion” of the almost 20,800 trades voided on May 6 when $862 billion in equity value was briefly erased in 20 minutes, regulators said.