FINRA Proposes Rule to Amend FINRA Rule 6432 to Prevent Issuers from Paying for Market-Making (with Lofchie Comment)

FINRA filed with the SEC a proposed rule change to amend FINRA Rule 6432 ("Compliance with the Information Requirements of SEA Rule 15c2-11"). The amendments would require members to certify that they will not accept any payment or other consideration for market-making from issuers and related persons. FINRA filed the proposed rule change to be effective immediately.

Lofchie Comment: The notion of allowing issuers to support market-making activity in their own securities is an interesting one, if it can be done in a manner that does not encourage the market-maker to pump up the stock, but rather encourages them to post two-way quotes that are within a reasonable size and spread. In some ways, the recent legislative proposal that issuers might require trading in their securities to be in 5 or 10-cent ticks, rather than in pennies, is in the same vein - that is, it encourages market-making activity in smaller, less liquid ways.

See: Text of Proposed Rule Change.