Are warrants and rights subject to the sub-penny quoting prohibitions of the Rule?
A warrant or right is subject to the Rule if it is an “NMS stock.” Under Regulation NMS, an NMS stock is any security for which transaction reports are collected, processed, and made available pursuant to either the CTA Plan or the Nasdaq/UTP Plan. Thus a warrant or right reported under the CTA or Nasdaq/UTP Plan would be subject to the sub-penny prohibition above $1.00. Question 15: An exemption from Rule 10a-1’s tick test permits registered market makers and exchange specialists publishing two-sided quotes in a security to sell short to facilitate customer market and marketable limit buy orders at the consolidated national best offer (NBO), regardless of the last trade price. (See Letter re: Bernard L. Madoff Investment Securities LLC (February 9, 2001).) Can such a registered market maker or exchange specialist sell short to fill a customer market or marketable limit buy order at a price lower than the NBO by a sub-penny increment in order to provide price improvement? For example,
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