Negative obligation

Negative obligation

A New York Stock Exchange rule that governs the behavior of specialists. Negative obligation is the mandate of the specialists not trade for the specialist's firm's own account when enough public investor orders exist to match up naturally -- without intervention. An example of violating negative obligation is Trading Ahead. Also see positive obligation.

Negative Obligation

New York Stock Exchange requirements on its specialists. The negative obligation forbids specialists from trading on their own accounts when enough matching orders exist to ensure a two-sided market. That is, when investors do not need a specialist to provide liquidity to the market, the negative obligation prohibits the specialist from trading on its own account. See also: Positive obligation.
References in periodicals archive ?
There is at least a good practice obligation that it is raising, it may crystallise into a legal obligation as well, to say to states that in the same way that you have this negative obligation not to assist with the death penalty in other countries, you must also try to level the playing field for your citizens when they are facing the death penalty in another country," the Special Rapporteur added.
2 "generally imposes a negative obligation on government rather than a positive obligation of protection or assistance.
The negative obligation is the duty to hang back and not trade for the specialist firm's own account when enough public investor orders exist to pair up naturally, without undue intervention.