Series 79 practice questionmediumStabilization
Which of the following best describes a passive market maker’s activity during a Regulation M restricted period?
- ABids are never allowed above the highest independent bid
- BPassive market making is prohibited entirely during the restricted period
- CPassive market makers may bid above the independent bid if the client requests
- DBids must not exceed the highest independent bid or a daily purchase limit✓ Correct answer
Explanation
Why D — Bids must not exceed the highest independent bid or a daily purchase limit
Passive market makers are limited to the highest independent bid and daily volume restrictions to prevent market manipulation. They cannot exceed these limits even at client request or bid above the market.
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