Backing away in securities refers to the failure of a market maker to complete a transaction after providing a firm quote. This means that when a market maker commits to buying or selling a specific quantity of a security, they do not follow through with the transaction. This practice is deemed unethical and violates the rules set by the National Association of Securities Dealers (NASD).
Backing away is primarily relevant in the context of securities trading and market regulation. It is often associated with financial law and regulations governing market makers and brokers. This term may come into play in disputes involving securities transactions, where users can utilize legal forms to address issues related to market maker obligations.
Here are a couple of examples of abatement:
Example 1: A market maker quotes a price of $50 for 100 shares of a stock. An investor agrees to this price, but the market maker later refuses to complete the transaction. This situation constitutes backing away.
Example 2: A broker provides a firm quote for a security but then fails to execute the trade when the investor accepts the offer (hypothetical example).
| Term | Definition | Key Differences |
|---|---|---|
| Backing Away | Failure to complete a transaction after a firm quote. | Specifically involves market makers and is considered unethical. |
| Quote Stuffing | Rapidly placing and canceling orders to manipulate market prices. | Involves manipulation rather than failure to execute. |
| Order Cancellation | Withdrawing an order before it is executed. | Can be a legitimate action, unlike backing away. |
If you believe you have been affected by backing away, consider taking the following steps:
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Document the details and consult a legal professional for advice.