NYSE Texas Rearranges Market Maker Rulebook
Published Date: 4/22/2025
Notice
Summary
NYSE Texas is updating its rules to bring back and move some important Market Maker guidelines into a new spot in their rulebook. This affects traders who act as Market Makers by clarifying their roles and responsibilities. The changes took effect right away on April 14, 2025, with no new fees involved—just clearer rules to keep things running smoothly.
Analyzed Economic Effects
7 provisions identified: 1 benefits, 4 costs, 2 mixed.
Who Must Register As Market Makers
Participants may not act as Market Makers on the Exchange unless they submit an application and are approved; registration becomes effective on notice of approval. Registered Market Makers are designated as dealers under the Securities Exchange Act. These registration rules took effect April 14, 2025.
Withdrawal, Suspension, and Re-Registration Rules
A Market Maker may withdraw registration by written notice; withdrawal becomes effective on the tenth business day after the Exchange receives notice. After withdrawal, a Participant may not re-register as a Market Maker for six months. The Exchange may suspend or terminate registration for failures such as not engaging in required dealings (including failure to enter quotations), effective April 14, 2025.
MMAT Qualification And Conduct Rules
Market Maker Authorized Traders (MMATs) may enter orders only for the Market Maker's account and must be registered. MMATs must complete the Series 57 exam and an Exchange-sponsored training program (the Series 57 may be waived if the MMAT served as a dealer-specialist or market maker for at least two consecutive years within three years of application). The Exchange can suspend or withdraw MMAT registration. These rules took effect April 14, 2025.
Market Maker Operational Obligations
Market Makers must engage in a course of dealings to help maintain fair and orderly markets, including a Two-Sided Obligation during Core Trading Hours and requirements that quoting interest be within a Designated Percentage of the National Best Bid or Offer (NBBO). Market Makers also must maintain adequate minimum net capital and may face disciplinary action for failures. These obligations became effective April 14, 2025.
Performance Standards For Designated/Lead MMKs
The Exchange adopted Rule 7.24 setting minimum performance standards for Designated Market Makers (measured by percent time at the NBBO, percent of executions better than the NBBO, average displayed size, average quoted spread, and, for derivatives, ability to transact in underlying markets). Lead Market Makers will be held to higher standards than non-Lead Designated Market Makers. This rule took effect April 14, 2025.
New Market-Maker Definitions Added
The Exchange added new definitions in Rule 1.1 for Lead Market Maker, Market Maker, and Market Maker Authorized Trader (MMAT). These definitions are part of the reinstated Market Maker rules and took effect April 14, 2025.
Temporary Withdrawal Process For Market Makers
A Market Maker may apply to temporarily withdraw from its Market Maker status for demonstrated legal or regulatory requirements or by providing an opinion of counsel; if granted, the Exchange may promptly reassign the securities to another Market Maker. This process is set out in Rule 7.23 and took effect April 14, 2025.
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