The Securities and Exchange Commission has proposed to issue an interpretation with respect to the definition of “automated quotation” under Regulation NMS. Rule 611 under Regulation NMS protects the best automated quotations of exchanges by prohibiting other exchanges from allowing trades to be executed at inferior prices, or “traded through.” To be deemed an “automated quotation,” a quotation must be, among other things, immediately executed and/or cancelled, transmitted and displayed, as appropriate. In the adopting release for Regulation NMS, the SEC provided that an “immediate” response meant the fastest response possible without any programmed delay. Any quotation that does not meet the requirements of an automatic quotation is deemed to be a “manual quotation.”
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