If a traders market changes, what amount of time is considered allowable before the trader updates his or her price?
Although the SEC firm quote rule, Rule 11AC1-1(c), does not apply to transactions in OTC eligible securities, its provisions and exceptions should be considered in providing guidance and responding to this question. SEC Rule 11Ac1-1(c) provides that a market maker must execute an order “presented” to it at a price at least as favorable as its published quotation up to its published quotation size. Exceptions to Rule 11Ac1-1 exist only if: (1) the market maker revises its quoted price or size prior to the order being presented; or (2) the market maker has effected or is in the process of effecting a transaction at the time an order is presented and immediately upon completion of that transaction communicates a revised quotation (the trade ahead exception). A trade-ahead exception for trades that are reported after the presentment of an order will not be permitted if a market maker executes a trade and changes its quote absent proof, such as the time of order entry, that the market maker
