Backing Away

AAA

DEFINITION of 'Backing Away'

Failure by a market maker in a security to honor the quoted bid and ask prices for a minimum quantity. Backing away constitutes a serious violation of industry regulations. NASD Regulation Inc uses an automated market surveillance system to enable the resolution of backing-away complaints in real time.

INVESTOPEDIA EXPLAINS 'Backing Away'

Backing away constitutes a breach of SEC Rule 11Ac1-1 or the firm quote rule, which requires a market maker to execute an order presented to it at a price at least as favorable as its published quotation, up to its published quotation size. A potential backing-away complaint has to be brought to the attention of the Market Regulation Department within five minutes of the alleged offense. Otherwise, it may be difficult for department staff to obtain a contemporaneous trade execution from the market maker.

NASD Regulation does not pursue immediate disciplinary action for an individual backing-away complaint where a contemporaneous trade execution from the market maker is obtained or offered. However, department staff keep a record of such transgressions, and repeated non-compliance with the firm quote rule could result in disciplinary action.

RELATED TERMS
  1. Market-Maker Spread

    The difference between the price at which a market maker is willing ...
  2. Nasdaq

    A global electronic marketplace for buying and selling securities, ...
  3. Ask

    The price a seller is willing to accept for a security, also ...
  4. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
  5. National Association Of Securities ...

    The NASD was a self-regulatory organization of the securities ...
  6. Market Maker

    A broker-dealer firm that accepts the risk of holding a certain ...
RELATED FAQS
  1. What are some of the major regulatory agencies responsible for overseeing financial ...

    There are a number of agencies assigned to regulate and oversee financial institutions and financial markets, including the ... Read Full Answer >>
  2. How did the Dodd-Frank Act change whistleblower protection and processes?

    In 2010, the Dodd-Frank Act strengthened and expanded the existing whistleblower program promulgated by the Sarbanes-Oxley ... Read Full Answer >>
  3. What are the pros and cons of holding a non-controlling interest in a company?

    Most investors hold a non-controlling interest – also known as a minority interest – of the companies in which they own shares. ... Read Full Answer >>
  4. What is the difference between shares outstanding and floating stock?

    Shares outstanding and floating stock are different measures of the shares of a particular stock. Shares outstanding is the ... Read Full Answer >>
  5. Which federal regulatory agencies approved and are now responsible for enforcing ...

    Five federal regulatory agencies approved and are jointly responsible for enforcing the Volcker rule. These agencies include ... Read Full Answer >>
  6. What's the difference between investment banks and commercial banks?

    Investment banking and commercial banking are two divisions of the banking industry that provide substantially different ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Principal Trading and Agency Trading

    Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out!
  2. Options & Futures

    The NYSE And Nasdaq: How They Work

    Learn some of the important differences in the way these exchanges operate and the securities that trade on them.
  3. Retirement

    Electronic Trading Tutorial

    Learn about the systems that run the market. Topics include market makers, specialists, SuperDOT, ECNs, SOES, Level I, II, and III Access, and more.
  4. Economics

    What is a Resident Alien?

    A resident alien is a foreigner who is a permanent resident of the country in which he or she resides but does not have citizenship.
  5. Entrepreneurship

    Employment Negotiations: What To Ask For & How

    Improving their first offer: What you should know
  6. Investing Basics

    The 5 Worst Financial Advisor Scammers of All Time

    A look back at history's five worst financial scams.
  7. Entrepreneurship

    How To Talk To Headhunters

    8 tips on forging a fruitful relationship with an executive recruiter.
  8. Investing

    Should Amtrak Be Privatized?

    This story examines whether or not Amtrak, the US consumer rail system, should be privatized in the wake of its tragic accident.
  9. Personal Finance

    The Purpose Of a FMLA Form

    Parsing the different types of paperwork that accompany a leave of absence under the Family Medical Leave Act.
  10. Professionals

    Fund Boards: What They Do and Why You Should Care

    Fund boards oversee management and operations of the fund on behalf of shareholders. Make sure you've got a board that will look out for you.

You May Also Like

Hot Definitions
  1. Radner Equilibrium

    A theory suggesting that if economic decision makers have unlimited computational capacity for choice among strategies, then ...
  2. Inbound Cash Flow

    Any currency that a company or individual receives through conducting a transaction with another party. Inbound cash flow ...
  3. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  4. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  5. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  6. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!