877-218-1776 
When broker dealers act as underwriters and as market makers there are inherent conflicts of interest. Regulation M Rule 103 was designed specifically to address these situations. Rule 103 regulates the activity of market makers participating in a distribution. Market makers that are participating in a distribution may only act as passive market makers during the restricted period. Passive market makers may not enter a bid for their own account or buy the security at a price that exceeds the highest bid entered by an independent party. If the highest independent bid entered by a nonparticipant drops below the bid of the passive market maker, the passive market maker may remain as the highest bid until it purchases an amount equal to the lesser of its volume restriction or 2 times the minimum quote size for the security. Once this volume restriction is reached, the passive market maker must lower its bid to a price no higher than the current independent bid. If there are no independent market makers, passive market making will not be allowed. The syndicate manager must apply for passive market making status on behalf of all syndicate members by filing part of the Underwriting Activity Form no later than one business day prior to the first full trading day of the restricted period.