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Wednesday, September 21, 2011

Equity Regulatory Alert #2011 - 13
FINRA Rule 5131 Amendment Approved by SEC, Effective Monday, September 26, 2011

Markets Impacted:

Contact Information:

What you need to know:

  • The proposed amendment to FINRA Rule 5131 prohibiting the acceptance of market orders to buy shares in Initial Public Offering (IPO) securities prior to the stock trading on its primary listing market has been approved by the Securities and Exchange Commission (SEC) and will be effective Monday, September 26, 2011.
  • This rule does not impact The NASDAQ Stock Market’s order acceptance policy.
  • Effective Monday, September 26, 2011, NASDAQ Execution Services, NASDAQ’s routing broker, will no longer process pegged (e.g. market pegged) routable buy orders in IPOs until the security trades on its primary listing market.

What is the FINRA Rule 5131 Amendment?

The FINRA Rule 5131 Amendment prohibits the acceptance of market orders to buy shares in IPO securities prior to the stock trading on its primary listing market. The amendment has been approved by the SEC and will be effective Monday, September 26, 2011.

What is changing?

Effective Monday, September 26, 2011, NASDAQ’s routing broker, NASDAQ Execution Services, will no longer process pegged (e.g. market pegged) routable buy orders in IPOs until the security trades on its primary listing market.

Firms seeking to submit market buy orders in IPO securities must send non-routable orders to NASDAQ. Any routable buy order that is pegged prior to the IPO trading at its primary listing market will be rejected.

Will FINRA Rule 5131 impact NASDAQ’s order acceptance policy?

No, FINRA Rule 5131 will not impact NASDAQ’s order acceptance policy or any non-routable orders.

Where can I find additional information?


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