NASDAQ Rules for Dividend Adjustment: The Nasda
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Posted On: 09/26/2019 2:11:40 PM
Re: Paul Jackson #6528
NASDAQ Rules for Dividend Adjustment:
The Nasdaq Stock Market Rules
Equity Rules
Rule 3000 - Responsibilities Relating to Associated Persons, Employees, and Others' Employees
3220. Adjustment of Open Orders
(a) A member holding an open order from a customer or another broker/dealer shall, prior to executing or permitting the order to be executed, reduce, increase or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment or distribution, on the day that the security is quoted ex-dividend, ex-rights, ex-distribution or ex-interest, except where a cash dividend or distribution is less than one cent ($.01), as follows:
(1) In the case of a cash dividend or distribution, the price of the order shall be reduced by subtracting the dollar amount of the dividend or distribution from the price of the order and rounding the result to the next lower minimum quotation variation used in the primary market, provided that if there is more than one minimum quotation variation in the primary market, then the greater of the variations shall be used;
(2) In the case of a stock dividend or split, the price of the order shall be reduced by rounding the dollar value of the stock dividend or split to the next higher minimum quotation variation used in the primary market as specified in paragraph (a)(1) and subtracting that amount from the price of the order; provided further, that the size of the order shall be increased by (A) multiplying the size of the original order by the numerator of the ratio of the dividend or split, (
dividing the result by the denominator of the ratio of the dividend or split, and (C) rounding the result to the next lower round lot; and
(3) In the case of a dividend payable in either cash or securities at the option of the stockholder, the price of the order shall be reduced by the dollar value of the cash or securities, whichever is greater, according to the formulas in subparagraph (1) or (2), above; provided, that if the stockholder opts for securities, the size of the order shall be increased pursuant to the formula in subparagraph (2), above.
(b) If the value of the distribution cannot be determined, the member shall not execute or permit such order to be executed without reconfirming the order with the customer.
(c) If a security is the subject of a reverse split, all open orders shall be cancelled.
(d) The term "open order" means an order to buy or an open stop order to sell, including but not limited to "good `til cancelled," "limit" or "stop limit" orders which remain in effect for a definite or indefinite period until executed, cancelled or expired.
(e) The provisions of this Rule shall not apply to:
(1) orders governed by the rules of another registered national securities exchange or the NASD;
(2) orders marked "do not reduce" where the dividend is payable in cash;
(3) orders marked "do not increase" where the dividend is payable in stock, provided that the price of such orders shall be adjusted as required by this Rule;
(4) open stop orders to buy;
(5) open sell orders; or
(6) orders for the purchase or sale of securities where the issuer of the securities has not reported a dividend, payment or distribution pursuant to SEC Rule 10b-17.
Adopted by SEC Release 34-53128 (Jan. 13, 2006).
Source:
http://nasdaq.cchwallstreet.com/NASDAQ/Main/
The Nasdaq Stock Market Rules
Equity Rules
Rule 3000 - Responsibilities Relating to Associated Persons, Employees, and Others' Employees
3220. Adjustment of Open Orders
(a) A member holding an open order from a customer or another broker/dealer shall, prior to executing or permitting the order to be executed, reduce, increase or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment or distribution, on the day that the security is quoted ex-dividend, ex-rights, ex-distribution or ex-interest, except where a cash dividend or distribution is less than one cent ($.01), as follows:
(1) In the case of a cash dividend or distribution, the price of the order shall be reduced by subtracting the dollar amount of the dividend or distribution from the price of the order and rounding the result to the next lower minimum quotation variation used in the primary market, provided that if there is more than one minimum quotation variation in the primary market, then the greater of the variations shall be used;
(2) In the case of a stock dividend or split, the price of the order shall be reduced by rounding the dollar value of the stock dividend or split to the next higher minimum quotation variation used in the primary market as specified in paragraph (a)(1) and subtracting that amount from the price of the order; provided further, that the size of the order shall be increased by (A) multiplying the size of the original order by the numerator of the ratio of the dividend or split, (
dividing the result by the denominator of the ratio of the dividend or split, and (C) rounding the result to the next lower round lot; and (3) In the case of a dividend payable in either cash or securities at the option of the stockholder, the price of the order shall be reduced by the dollar value of the cash or securities, whichever is greater, according to the formulas in subparagraph (1) or (2), above; provided, that if the stockholder opts for securities, the size of the order shall be increased pursuant to the formula in subparagraph (2), above.
(b) If the value of the distribution cannot be determined, the member shall not execute or permit such order to be executed without reconfirming the order with the customer.
(c) If a security is the subject of a reverse split, all open orders shall be cancelled.
(d) The term "open order" means an order to buy or an open stop order to sell, including but not limited to "good `til cancelled," "limit" or "stop limit" orders which remain in effect for a definite or indefinite period until executed, cancelled or expired.
(e) The provisions of this Rule shall not apply to:
(1) orders governed by the rules of another registered national securities exchange or the NASD;
(2) orders marked "do not reduce" where the dividend is payable in cash;
(3) orders marked "do not increase" where the dividend is payable in stock, provided that the price of such orders shall be adjusted as required by this Rule;
(4) open stop orders to buy;
(5) open sell orders; or
(6) orders for the purchase or sale of securities where the issuer of the securities has not reported a dividend, payment or distribution pursuant to SEC Rule 10b-17.
Adopted by SEC Release 34-53128 (Jan. 13, 2006).
Source:
http://nasdaq.cchwallstreet.com/NASDAQ/Main/
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