Editorial Note on Part 240
Editorial Note: Nomenclature changes to part 240 appear at 57 FR 36501, Aug. 13, 1992, and 57 FR 47409, Oct. 16, 1992.

§ 240.3b-8 Definitions of “Qualified OTC Market Maker, Qualified Third Market Maker” and “Qualified Block Positioner”. For the purposes of Regulation U under the Act (12 CFR part 221): ( a ) The term *Qualified OTC Market Maker* in an over-the-counter (“OTC”) margin security means a dealer in any “OTC Margin Security” (as that term is defined in section 2(j) of Regulation U (12 CFR 221.2(j)) who ( 1 ) is a broker or dealer registered pursuant to section 15 of the Act,
( 2 ) is subject to and is in compliance with Rule 15c3-1 (17 CFR 240.15c3-1),
( 3 ) has and maintains minimum net capital, as defined in Rule 15c3-1, of the lesser of ( i ) $250,000 or
( ii ) $25,000 plus $5,000 for each security in excess of five with regard to which the broker or dealer is, or is seeking to become a Qualified OTC Market Maker, and
( 4 ) except when such activity is unlawful, meets all of the following conditions with respect to such security: ( i ) He regularly publishes bona fide, competitive bid and offer quotations in a recognized inter-dealer quotation system,
( ii ) he furnishes bona fide, competitive bid and offer quotations to other brokers and dealers on request,
( iii ) he is ready, willing and able to effect transactions in reasonable amounts, and at his quoted prices, with other brokers and dealers, and
( iv ) he has a reasonable average rate of inventory turnover in such security.
( b ) The term *Qualified Third Market Maker* means a dealer in any stock registered on a national securities exchange (“exchange”) who ( 1 ) is a broker or dealer registered pursuant to section 15 of the Act,
( 2 ) is subject to and is in compliance with Rule 15c3-1 (17 CFR 240.15c3-1),
( 3 ) has and maintains minimum net capital, as defined in Rule 15c3-1, of the lesser of ( i ) $500,000 or
( ii ) $100,000 plus $20,000 for each security in excess of five with regard to which the broker or dealer is, or is seeking to become, a Qualified Third Market Maker, and
( 4 ) except when such activity is unlawful, meets all of the following conditions with respect to such security: ( i ) He furnishes bona fide, competitive bid and offer quotations at all times to other brokers and dealers on request,
( ii ) he is ready, willing and able to effect transactions for his own account in reasonable amounts, and at his quoted prices with other brokers and dealers, and
( iii ) he has a reasonable average rate of inventory turnover in such security.
( c ) The term *Qualified Block Positioner* means a dealer who ( 1 ) is a broker or dealer registered pursuant to section 15 of the Act,
( 2 ) is subject to and in compliance with Rule 15c3-1 (17 CFR 240.15c3-1),
( 3 ) has and maintains minimum net capital, as defined in Rule 15c3-1 of $1,000,000 and
( 4 ) except when such activity is unlawful, meets all of the following conditions: ( i ) He engages in the activity of purchasing long or selling short, from time to time, from or to a customer (other than a partner or a joint venture or other entity in which a partner, the dealer, or a person associated with such dealer, as defined in section 3(a) (18) of the Act, participates) a block of stock with a current market value of $200,000 or more in a single transaction, or in several transactions at approximately the same time, from a single source to facilitate a sale or purchase by such customer,
( ii ) he has determined in the exercise of reasonable diligence that the block could not be sold to or purchased from others on equivalent or better terms, and
( iii ) he sells the shares comprising the block as rapidly as possible commensurate with the circumstances.
(15 U.S.C. 78a *et seq.,* as amended by Pub. L. 94-29 (June 4, 1975), particularly secs. 2, 3, 11, 15, 17 and 23 thereof (15 U.S.C. 78b, 78c, 78k, 78 o, 78q and 78w))
[48 FR 39606, Sept. 1, 1983]