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📘 Trade Type Explanation: Rule 155 (AMEX Only)

What is it?

Rule 155 trades are specific to the American Stock Exchange (AMEX) and involve a specialist or market maker stepping in to provide liquidity when there's an order imbalance or to facilitate large block trades.

When does it occur?

Rule 155 trades occur:

  • During regular trading hours on the AMEX
  • When there's a significant order imbalance
  • To facilitate large block trades
  • To maintain fair and orderly markets

Key characteristics:

  • Executed by AMEX specialists or market makers
  • Often involves larger than average trade sizes
  • Aims to reduce volatility and maintain market stability
  • May be executed at prices outside the current bid-ask spread

Impact on trading data:

  • Open: • Can impact opening price if used to resolve pre-market order imbalances
  • High/Low: • May affect daily high/low if executed at prices outside the normal range
  • Close: • Can influence closing price if used to resolve end-of-day imbalances
  • Volume: • Often contributes significantly to daily volume due to size
  • VWAP: • Included in VWAP calculations, can have notable impact due to size
  • Other: • May cause temporary price movements or volatility

Why it matters:

Understanding Rule 155 trades is important for retail traders because:

  1. They can explain sudden price movements or volume spikes in AMEX-listed stocks
  2. Indicate potential market instability or significant events affecting a stock
  3. Can present opportunities or risks for traders watching order flow
  4. Help in understanding market microstructure and liquidity provision on AMEX

Accessibility and restrictions:

  • Retail investors: Not directly accessible, but can observe the effects
  • Institutional investors: May benefit from Rule 155 trades for large orders
  • Restrictions: Limited to AMEX specialists and market makers
  • Broker-specific considerations: Most retail brokers don't offer this service

Example:

A sudden influx of sell orders for stock ABC creates an imbalance. The AMEX specialist uses Rule 155 to buy a large block of ABC shares, temporarily stepping in as the buyer to maintain an orderly market.

Technical details:

  • SIP Mapping: Reported with a specific identifier indicating a Rule 155 trade
  • Reporting requirements: Must be reported immediately and identified as Rule 155 trades

Related trade types:

  • NYSE Rule 127: Similar concept but specific to NYSE
  • Block Trade: Large trades that may be facilitated using Rule 155
  • Specialist Trades: Other types of trades executed by exchange specialists

Common misconceptions:

  1. Some traders may confuse Rule 155 trades with regular large orders
  2. There's a misconception that these trades always indicate insider activity or impending news

Historical context:

Rule 155 was implemented to enhance market stability and liquidity on the AMEX, allowing specialists to intervene in situations that could otherwise lead to disorderly trading conditions.

Regulatory considerations:

Rule 155 trades are monitored to ensure they're used appropriately to maintain fair and orderly markets, not for the specialist's personal benefit. They must comply with AMEX regulations and broader securities laws regarding market manipulation and best execution.

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