Backing Away

What is ‘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.

Explaining ‘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.

Backing Away FAQ

What’s the definition of backing away?

Backing away is the failure of a market maker to honor the quoted bid and ask prices for a minimum quantity. This is considered to be an ethical violation of industry regulations.

Who are you backing meaning?

Providing resources and funding for an individual or organization is called backing.

What does painting the tape mean?

Painting the tape is a form of market manipulation in which participant trade securities among themselves to create the appearance of increased activity and influence market prices.

What is considered market manipulation?

Market manipulation refers to the deliberate attempt to increase or decrease market prices for personal gain.

Is churning market manipulated?

Churning is a form of market manipulation in which a trader buys and sells the same stock, making it seem more interesting.

Further Reading

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