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SEC Rules for Broker Dealer Exchange Specialists Securities and Exchange Commission rules regulate information that must be provided to the public by broker dealers who serve as New York, American, or other national exchange specialists or as Nasdaq market makers. Such broker dealers in effect trade for their own accounts as well as for customers. They thus are required to follow Commission Rules 11Ac1-1 and 11Ac1-4 under the Securities Exchange Act of 1934, 17 CFR 240.11Ac1-1 and 17 CFR 240.11Ac1-4, designed to increase the amount of public information regarding quotes and order handling.

Rule 11Ac1-1, otherwise known as the Quote Rule, requires publication of quotation information by specialists and market makers. The public must be informed regarding the best price available from the specialist or market maker, including the lowest price that will be accepted from a purchaser of securities handled by the specialist and the highest price the specialist will pay to buy the securities from any customer. While the specialist may be able to trade at other prices over an electronic communications network, such other trades will comply with the Commission rule only if the electronic communications network in turn publishes the other prices made available by the specialist over the network and offers those prices to the public. Thus, the Quote Rule requires that the best prices for securities trading are generally available to the public.

Rule 11Ac1-4, also known as the Limit Order Display Rule, requires the display or publication by specialists and market makers of pending limit orders received from customers. Limit orders are orders by customers to buy or sell particular quantities of securities at particular prices. If a limit order is at a better price than the quote provided by the specialist, required publication of the limit order allows the public to learn about and seek to trade at that limit order. Publication of limit orders also allows the public to follow changes in levels of interest in a security at particular prices.