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| Frequently Asked Questions |
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| Q: | Why is Amex trading Nasdaq securities on a UTP basis? | |
| A: | A key goal of the American Stock Exchange is to provide the investment community with easy access to deep liquidity across a diverse collection of products. Trading Nasdaq stocks continues the strong record of innovation at the American Stock Exchange. Firms and institutions will now have a source of deep liquidity in Nasdaq securities and the ability to execute large blocks of stock at one price.
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| Q: | Which Nasdaq securities are trading? | |
| A: | For the full list of UTP securities click here.
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| Q: | Which specialist firms are trading Nasdaq securities on the Amex floor? | |
| A: | The program includes the following leading specialist firms: Bear Hunter Structured Products LLC (a subsidiary of Bear Wagner Specialists LLC); Equitec Specialists, LLC; Kellogg Capital Group LLC; and Susquehanna International Group LLP.
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| Q: | How are Nasdaq stocks traded at the Amex? | |
| A: | Nasdaq stocks trade on the Amex floor the same way as Amex-listed securities: via a standard agency auction market. Orders in Nasdaq stocks can be placed with a floor broker, with a specialist, or electronically.
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| Q: | What rules are in place for the trading of Nasdaq stocks on the Amex? | |
| A: | To see a summary of the rules filed and approved by the SEC click here. In the majority of instances, Nasdaq stocks trade under the same rules as Amex listed stocks. However there are some exceptions, including the short sale and trade-through rules, which are addressed below.
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| Q: | How can Nasdaq stocks be accessed electronically at the Amex? | |
| A: | Member firms can directly route an order to the Amex floor through the Common Message Switch (CMS). In addition, member firms can electronically access the Amex as a shared user of services bureaus (click for contact list) that have an electronic connection to CMS.
The Amex requests that member firms test the standardized message format to ensure the proper transmission of four and five character symbols to accommodate Nasdaq trading. See the Technology Specification Sheet.
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| Q: | In what other ways can the Amex be accessed? | |
| A: | Member firms can also use floor brokers -- their own brokers or $2 brokers -- to access Amex liquidity. Member firms that route orders through CMS and subscribe to the Exchange's Booth Automated Routing System (BARS) can send orders to a broker's booth. This automatic routing system allows floor brokerage firms to transmit orders received in their booth to a broker's hand-held terminal for representation in the trading crowd, or to the specialist's book. Different parameters, conditions, and order types can be preset to fully automate this process. Non-members who are sponsored by a floor member with access to BARS may route orders electronically through CMS to the sponsoring member's BARS terminal.
Nasdaq market makers who are represented by an Amex clearing firm can telephone specialists with their orders (see below FAQs). To request specialist contact information, e-mail trade@amex.com.
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| Q: | How are orders and execution reporting for Nasdaq securities handled? Does the Amex participate in Nasdaq's SuperMontage? | |
| A: | Orders and execution reporting for Nasdaq securities are accepted and processed by all systems presently used to route orders to the Amex. These include the Common Message Switch (CMS), the Amex Order File (AOF), New Equity Trading System (NETS), the Booth Automated Routing System (BARS), and the Intraday Comparison System for Equities (IDCE). The Amex does not participate in SuperMontage. Nasdaq does not allow the Amex to be accessible via SuperMontage.
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| Q: | How can I view the Amex quote? | |
| A: | The Amex BBO can be viewed on market data vendor quote displays, including Nasdaq Workstation II (NWII). Amex quotes are currently disseminated with the “A” market center originator identifier via UTP Quotation Data FeedSM (UQDF), and NASDAQ Quotation Dissemination ServiceSM (NQDS) during the UTP parallel period for NQDS. Amex quotes are viewed with the market participant identifier of “Amex” within the NQDS quotation message seen on Level II. This parallel period is scheduled to end on March 31, 2003, when NQDS will cease to disseminate UTP participants' (including Amex) quotes that are not participating in Nasdaq proprietary systems. It is anticipated that each major market data vendor--including NWII--will integrate the quote data from NQDS and UQDF into a single quotation montage by March 31. Therefore, continue to view the Amex quotes on current market data vendor quote screens (NWII included).
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| Q: | Does the Amex have a short sale rule for Nasdaq securities? | |
| A: | No. There is no "tick test" or "bid test" for conducting short sale transactions on the Amex in Nasdaq securities. This will change upon the approval of Nasdaq's exchange application.
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| Q: | Does the Amex use the Intermarket Trading System (ITS) for trading Nasdaq securities? | |
| A: | No. ITS is only used for listed securities. There is no official intermarket linkage system for Nasdaq securities.
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| Q: | Does the Amex have a trade-through rule for Nasdaq securities? | |
| A: | The Amex will maintain its current standards and provide all orders with floor-wide trade-through protection. Orders sent to the Amex receive the benefit of interacting with all trading interest on the floor and the specialist's limit order book. However, the Amex will not have a trade-through rule similar to the rules for listed trading. When executing block orders, the Amex can execute large quantities of stock at one price, which may be outside the prevailing Nasdaq BBO.
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| Q: | How does the Amex access other markets? | |
| A: | Amex specialists use ECNs and other order routing systems commonly used by other Nasdaq traders.
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| Q: | When I send an order to the specialist, will I get an automatic execution? | |
| A: | The SEC approved Amex enhanced Auto-Ex functionality and the Amex is implementing the rollout during the fourth quarter of 2004. For details click on Amex NETS 3 Automatic Execution System.
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| Q: | If I am a Nasdaq market maker and would like to execute a trade directly with an Amex specialist over the telephone, how do I do this? | |
| A: | Nasdaq market makers may call the specialist directly over the telephone to execute a trade. Telephonic access is only one form of access and is described here because it is the only form of access currently mandated in the OTC UTP Plan. In fact, Nasdaq market makers are also required under the Plan to provide telephonic access to the Amex specialist. Nasdaq market makers must provide the following information to the specialist: (1) name; (2) firm's name; (3) call-back phone number; (4) name of the Amex clearing firm and its clearing number; (5) name of the floor broker representing them on the Amex trading floor; (6) account type for the order that they are placing (see relevant account types below); and (7) order terms (symbol, side, size, price, and any special terms). Be sure to have this information before trying to execute telephone orders with an Amex specialist. When Nasdaq market makers contact a specialist by telephone for the first time, it will be necessary for the specialist to take reasonable steps to ensure that the order is genuine.
After transacting business by telephone with an Amex specialist, Nasdaq market makers must contact their Amex floor representative in order to have a ticket delivered to the specialist post confirming the telephone order. This ticket confirmation should take place no more than fifteen minutes from the time the trade is executed with the Amex specialist. The trade must be input into the Amex comparison system with the correct account type (see relevant account types below) to indicate that the order is from a Nasdaq market maker and was placed telephonically with the Amex specialist pursuant to the UTP plan.
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| Q: | What are the relevant account types for Nasdaq market makers who would like to execute a trade directly with an Amex specialist over the telephone? | |
| A: | Relevant account types are: 3 - Transactions cleared for a Nasdaq market maker who is affiliated with the clearing member that resulted from telephone access to the specialist. 4 - Transactions cleared for a member's Nasdaq market maker that is not affiliated with the clearing member that resulted from telephone access to the specialist. 5 - Transactions cleared for a non-member Nasdaq market maker that is not affiliated with the clearing member that resulted from telephone access to the specialist. Note: Different account types are used for orders that are not directly telephoned to the specialist by or for the account of a Nasdaq market maker. |
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| Q: | When an order is sent electronically to the Amex to buy the shares offered, is the crowd able to participate, locking the electronic order out of part of the offered stock? | |
| A: | No. The Amex has a rule called eQPriority, which guarantees that the electronically delivered order has priority over all other interest in the crowd up to the amount of shares published in the Amex quote at the time the order is announced. The crowd is only able to match the electronic order after such order is filled for the amount published in the quote.
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| Q: | What do I do if I want to address a problem with a specific trade in a Nasdaq security on the Amex? | |
| A: | There are three ways to have trading concerns addressed: 1. For electronically delivered orders, the Amex has a Service Desk operation specifically focused on the Amex program to trade Nasdaq-listed securities. The UTP Service Desk manager can be reached at (212) 306-2600 to answer questions regarding orders and executions. 2. For system orders, broker handled orders and/or orders telephoned directly to a specialist, an Amex broker or floor representative can directly represent orders or concerns on the floor, and can also petition an Amex Floor official, if necessary. 3. The Amex has setup a UTP Regulation Hot Line at 212-306-1381. This number has been set aside specifically for regulatory concerns about Nasdaq UTP securities and will put a caller into direct contact with an analyst from Amex Member Firm Regulation.
To have concerns addressed by the business side of the Amex-Nasdaq UTP program, please call (800) 932-1332.
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| Q: | What is Amex policy in the event of a Nasdaq trading halt? | |
| A: | If it is a regulatory halt, the Amex will also halt trading. If the halt is due to Nasdaq system problems, the Amex will continue to trade.
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| Q: | How do I access the Amex? | |
| A: | The Amex can be accessed in four major ways:
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| Q: | What is the Amex process for setting the open in Nasdaq securities? | |
| A: | Click on the process for determining the opening price.
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| Q: | Why is the Amex opening process better than the Nasdaq opening process? | |
| A: | Click on the description of shortcomings of the Nasdaq opening price For more information, click on the process for determining the opening price.
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| Q: | What is the difference between a regular opening and an auxiliary opening at the Amex? | |
| A: | A regular opening at the Amex occurs daily, except for expiration days when an auxiliary opening is conducted. Auxiliary openings are conducted once a month on expiration Fridays for stock orders relating to opening price settling index options, index futures, and options on index futures. During an auxiliary opening: (a) there is a 9 a.m. cut-off time for entry of on-open orders that must be tied to index expiration and marked OPG;* (b) opening order imbalances are published at 9 a.m.; (c) OPG orders may be canceled or reduced in size, but firms have to maintain a written record describing the rationale for these changes. Apart from the procedures highlighted above, other procedures during regular openings and the auxiliary opening are the same. *Note: Stock orders relating to opening-price settling contracts must be identified "OPG." Firms entering these orders through AOF that are unable to identify orders as "OPG" may use a unique branch code or firm identifier (mnemonic) to identify these orders. Firms unable to identify these orders in either way as well as firms not using AOF must submit a list of all these orders and related details to the Amex Market Surveillance Department.
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| Q: | What happens if the Amex does not have a timely opening in a stock? | |
| A: | Click on Amex policy for instances when there is no opening trade before 10 a.m.
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| Q: | What happens if the Amex has a delayed opening? | |
| A: | A delayed opening occurs once an indication has been published, however a delayed opening must be declared if no trade has occurred in a stock by 10 a.m. The Amex will publish indications-of-interest from as early as 9:15 a.m., as well as a delay message stating the cause of the delayed opening. Once the Amex has determined to open the stock, it will disseminate a resume message.
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| Q: | Does the Amex publish opening imbalances and indications of interest in Nasdaq stocks at the opening? | |
| A: | Yes. While the Amex may publish opening indications-of-interest on a daily basis, depending on market circumstances, it only publishes opening order imbalances on auxiliary openings.
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| Q: | What opening order types does the Amex support? | |
| A: | Market OPG, limit OPG, regular market and limit orders are supported. On expiration days, on-open orders related to the expiration index options, index futures, or options on index futures are marked OPG. OPG orders can also be used on regular openings.
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| Q: | What is the Amex process for setting the AOCP for Nasdaq securities? | |
| A: | Click on the process for determining AOCP.
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| Q: | Why is the Amex closing process better than the Nasdaq process? | |
| A: | Click on the description of shortcomings of the Nasdaq Official Closing Price. For more information, click on the process for determining AOCP.
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| Q: | How does the Amex official closing price (AOCP) compare to the Nasdaq official closing price (NOCP)? | |
| A: | The Amex specialists will determine the AOCP based upon market forces and supply and demand in the marketplace. To the extent that there is little or no imbalance, this determination will be derived, in part, from observing and interacting with trading activity in other market centers, including but not limited to SuperMontage. To the extent that there are sizable MOC imbalances, price impact can be expected. Given the clear limitations to the existing Nasdaq closing process, the Amex would not try to duplicate the NOCP, as we believe that this would merely perpetuate the utilization of a flawed closing price.
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| Q: | Does the Amex display its limit book? Does the Amex have Open Book so that firms can see informational imbalances? | |
| A: | The Exchange plans to implement open book in some of its products, but does not plan to do so for Nasdaq UTP stocks at this time. Note, however, that the Amex does allow publication of Informational Imbalances, with Floor Official approval, before 3:40 p.m. This does not have any impact on the official 3:40 p.m. and 3:50 p.m. publications.
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| Q: | What if the Amex receives no MOC orders in a particular security? How will it be publicly known that the Amex is not the official close? | |
| A: | While the Amex believes that this will be an unlikely and infrequent scenario, contingencies are in place if this occurs. If the Amex receives no MOC orders, the Amex will not post an AOCP and firms can revert to the NOCP for that stock on that particular day. In addition, the Amex posts AOCP information on the Amex website starting at 4:15 p.m. on a daily basis. If no AOCP is posted for a given stock, it can be assumed that the Amex is not the official close on that day.
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| Q: | For member firms providing electronic access to other broker/dealers, does the Amex have a gating facility for filtering orders that are not offsetting published imbalances during the 3:40p.m. to 4:00 p.m. time period? | |
| A: | No, the Amex has no gating facility to stop entry of on-close orders on the wrong side of the published imbalances into Amex systems. It is important that broker/dealers are adequately informed of Amex rules and procedures because the Exchange has rules prohibiting member firms from entering such orders and may bring regulatory action against offenders in accordance with its SRO obligations.
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| Q: | If a firm has direct access to the Amex via a correspondent clearing relationship, who is responsible for the erroneous entry of orders on the wrong side of a published imbalance? | |
| A: | The subscribing member/member organization is always responsible for all order flow that goes through that member's or member organization's mnemonic whether or not that member/member organization is self clearing.
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| Q: | In offsetting published imbalances, can a firm send orders to "flip" imbalances to the contra side? | |
| A: | Yes, the following example shows a "flip" from Buy to Sell Imbalance: If there is a 50,000 share buy imbalance published at 3:40 p.m. and we receive an order of 100,000 shares to sell offsetting that imbalance, the imbalance will flip to become a 50,000 shares to sell imbalance.
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| Q: | Does the Amex support electronic or floor limit on close (LOC) orders? | |
| A: | The Amex supports both electronic and floor delivered LOC orders.
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| Q: | What happens to ordinary limit orders at the close? | |
| A: | If limit orders on the book (or announced before the close in the Crowd) are unexecuted at the close and are marketable at the closing price ( i.e., a buy limit order is marketable if it's limit price is above the closing price, and a sell limit order is marketable if it's limit price is below the closing price), then they must be executed at the closing price as contra orders to the MOC imbalance. If limit orders on the book (or announced before the close in the Crowd) are unexecuted at the close and are limited to the closing price, then they may be executed in whole or in part at the closing price (in time priority order) as contra orders to the MOC imbalance. These regular limit orders have priority over LOC orders limited to the closing price and must all be executed before any LOC orders limited to the closing price may participate in the close.
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| Q: | Is there an automatic switch from NOCP to AOCP in Order Management Systems? | |
| A: | The Amex encourages firms with order management systems to program their systems to automatically pick up the AOCP data at the close. The AOCP and NOCP are both fed to market data vendors through the UTP Trade Data Feed. During the Pilot phase of this program, firms may wish to obtain the AOCP manually or via the Amex website.
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| Q: | Is there an automatic switch from Nasdaq intraday prices to AOCP at the close? | |
| A: | The Amex disseminates the AOCP at 4:15 p.m., which is after the close. Firms that mark to the close are advised to program their systems to automatically pick up the AOCP data at this time or later. The AOCP is disseminated to market data vendors through the UTP Trade Data Feed. During the Pilot phase of this program, firms may wish to obtain the AOCP manually or through the Amex website.
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| Q: | Does the Amex have a regulatory program for the openings? | |
| A: | Yes. The Amex has established regulatory and surveillance procedures for its UTP program. Generally, regulatory procedures are not disclosed.
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| Q: | How does the Amex deal with delayed openings and trading halts? | |
| A: | Regulatory and non-regulatory halts are treated differently. If the listing market calls a regulatory halt, the Amex will not open the affected stock until the halt is lifted. If the halt persists through the day, the Amex will cancel all on open orders in the stock and will not report an opening price for that stock on that day. If the halt is due to extraordinary market activity, the Amex will treat the halt as it would a regulatory halt for the purposes of the open. If a non-regulatory halt is called by another market, the Amex will open the stock and will report an opening price for the stock for that day.
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| Q: | What are the minimum and maximum sizes for a valid opening order? | |
| A: | There is no minimum size associated with an opening order. A maximum of 99,900 shares is supported for orders entered electronically, but there is no maximum size for orders entered through a floor broker.
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| Q: | Can the specialists access other market centers via ECNs before the opening? | |
| A: | Yes, Amex specialists can access other market centers using their proprietary trading systems. However, the Amex specialist must provide the same price to a resting limit order on the book.
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| Q: | Does the opening auction include orders from the limit order book? | |
| A: | Yes. However, opening market orders have precedence over limit orders on the book and these limit orders are not guaranteed participation in the open except if they are priced better than the opening price. Click on opening procedures for handling of orders limited to the opening price.
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| Q: | How do Amex specialists hedge around the opening? | |
| A: | Amex specialists either (1) bear the risk of the opening transaction, or (2) access other markets' liquidity before or shortly after 9:30 a.m. and must give the VWAP price to on-open orders in their order book.
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| Q: | What technology procedures are employed to satisfy opening order imbalances? | |
| A: | The Amex has proprietary linkages to disseminate order imbalances to newswire services, and would accept orders in response to the publications via the regular means of accessing the Amex. Note that Amex specialists may also supply liquidity to offset opening order imbalances.
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Q: | Is there a minimum size for valid MOC orders? |
| A: | No.
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| Q: | Can the specialists access other market centers via ECNs? | |
| A: | Yes. Amex specialists can access other market centers using their proprietary trading systems. However, the Amex specialist cannot trade in ECNs or the Nasdaq market during the brief interval between the Amex market close at 4:00 p.m. and the MOC trade print.
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| Q: | Does the closing auction include orders from the limit order book? | |
| A: | Yes. However, the orders on the limit order book have lower priority than MOC orders, and are not guaranteed participation in the close.
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| Q: | If a firm sends a MOC order to the Amex, can they trade elsewhere in that security? | |
| A: | Yes, firms can send orders elsewhere, while they have MOC/LOC orders in accumulation at the Amex.
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| Q: | If a firm sends a MOC order to the Amex, can they trade more regular limit orders on the Amex? | |
| A: | Yes, firms can also enter regular limit and/or market orders on the Amex while they have pending MOC/ LOC orders in accumulation on the order book. There are limitations to the manner in which traders can interact with the Amex market during the closing process. Traders need to have legitimate business reasons for entering such orders. See Amex Notice on Inappropriate Manipulation of the Close.
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| Q: | What technology procedures are employed to satisfy order imbalances? | |
| A: | The specialists may supply liquidity to offset order imbalances, or may access other market centers to satisfy order imbalances using their proprietary systems.
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| Q: | What regulatory program does the Amex use to monitor the specialists' activity on the close? | |
| A: | The Amex has established regulatory and surveillance procedures for its UTP program, which have been reviewed with the SEC. For obvious reasons, details of regulatory procedures are not otherwise disclosed.
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| Q: | Are Amex specialists subject to the Manning Rule? | |
| A: | The Manning Rule is only applicable to trades in markets, which the NASD regulates as SRO. The Amex, however, has a similar rule. Pursuant to Amex Rule 155, a specialist on the Amex must give precedence to executable orders entrusted to him or her as an agent before buying or selling in the same stock for an account in which the specialist has an interest.
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| Q: | How does the Amex deal with trading halts? | |
| A: | Regulatory and non-regulatory halts are treated differently. If the listing market calls a regulatory halt, the Amex will halt trading in that stock, and, if the halt persists until the end of the trading day, the Amex will cancel all MOC/ LOC orders in the stock and will not disseminate an AOCP for that stock on that day. If the listing market declares a halt is due to Extraordinary Market Activity, the Amex will treat the halt as it would a regulatory halt for the purposes of the close. If a non-regulatory halt is called by another market, the Amex will continue to trade the stock and will issue an AOCP for the stock for that day. If a non-regulatory halt is called by the Amex and that halt continues through the end of the day, then other markets will continue to trade the stock, but the Amex will cancel all MOC/ LOC orders in the stock and will not disseminate an AOCP for that stock on that day.
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| Q: | Are on-open order imbalances published over the consolidated tape? | |
| A: | No. Imbalances are published to market data vendors as news items via Amex proprietary technology and/or feeds.
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| Q: | How are the opening prices disseminated to the world? What is the identifier? | |
| A: | Opening transactions are reported as the first regular way trade from the Amex. With the new Nasdaq SIP Enhancement 5.0 scheduled for a fourth quarter 2004 release, the Amex intends to introduce an opening trade condition modifier.
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| Q: | If a firm would like to participate on the other side of an opening imbalance, how do they find the information? | |
| A: | On auxiliary opening days, the Amex will publish its on-open order imbalances to its web site within the Trading Data section and to newswire services. For instance, the Bloomberg page AMXN is dedicated to Amex imbalance publications. Other vendors will use their own variation of this. Firms should contact their vendor to determine how they plan to display this information. See the last FAQ below for each major vendor's code.
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| Q: | Are on-close order imbalances published over the consolidated tape? | |
| A: | No. Imbalances are published to market data vendors as news items via Amex proprietary technology and/or feeds.
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| Q: | How are the closing prices disseminated to the world? What is the identifier? | |
| A: | Amex will mark its AOCP will the "M" sale condition modifier in the UTP Trade Data Feed (UTDF). Market data vendors will receive the AOCP from UTDF and display it according to their naming conventions. For instance, the AOCP will be displayed in the Trade Recap page on Bloomberg as condition code "NC" under the exchange code "A". Firms should contact their vendor to determine how they plan to display this information. See the last FAQ below for each major vendor's codes.
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| Q: | If a firm would like to participate on the other side of a closing imbalance, how do they find the information? | |
| A: | The Amex publishes its order imbalances to its website within the Trading Data section and to newswire services. For instance, the Bloomberg page AMXN is dedicated to Amex imbalance publications. Other vendors will use their own variation of this. Each vendor may display this information differently. Below are major vendor codes:
Reuters, Reuters Plus, IDN, Bridge |
