Negative Obligation

AAA

DEFINITION of 'Negative Obligation'

An obligation of NYSE specialists to remain on the sidelines and refrain from acting as principal when there is sufficient market demand and supply to efficiently match orders.

INVESTOPEDIA EXPLAINS 'Negative Obligation'

The negative obligation ensures that specialists are not getting involved in the market on their own behalf when the market is able to "make itself" and sufficiently match buyers with sellers. This obligation on the specialists provides the public with the opportunity to transact with each other without specialist intervention.

RELATED TERMS
  1. Specialist

    A member of an exchange who acts as the market maker to facilitate ...
  2. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  3. Trading Ahead

    When a specialist trades securities for his or her own firm's ...
  4. Affirmative Obligation

    An obligation of NYSE specialists to enter the market on a particular ...
  5. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  6. Fintech

    Fintech is a portmanteau of financial technology that describes ...
Related Articles
  1. Investing Basics

    Explaining Market Value of Equity

    Market value of equity is the total value of all the outstanding stock as measured in the stock market at a particular time.
  2. Investing Basics

    What is Spread?

    Spread has several slightly different meanings depending on the context. Generally, spread refers to the difference between two comparable measures.
  3. Investing Basics

    What is the Secondary Market?

    The secondary market is where investors purchase securities or assets from other investors, rather than from the issuing companies themselves.
  4. Economics

    What is the Breakeven Point?

    In general, when gains or revenue earned equals the money spent to earn the gains or revenue, you’ve hit the breakeven point.
  5. Stock Analysis

    What is the Price-to-Sales Ratio?

    The price-to-sales ratio is an indicator of the value placed on each dollar of a company’s sales or revenues.
  6. Investing Basics

    What is Treasury Stock?

    Treasury stock is a company’s own stock that it holds in its treasury for later use.
  7. Investing Basics

    What is a Mid-Cap?

    Mid-cap companies are those with a market capitalization between two and $10 billion.
  8. Brokers

    10 Brokers That Pay You To Open An Account

    Open an account with one of these brokers and you will get a bonus. Just be sure it's the right account for your needs.
  9. Fundamental Analysis

    What's a Drawdown?

    A drawdown is usually expressed as a percentage change between the peak price and the low price (trough) of an investment.
  10. Brokers

    How Real Estate Agent and Broker Fees Work

    Buying or selling a home? What you need to know about real estate agent and broker fees.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center