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All Definitions »Stopping Stock
Stopping Stock Meaning & Definition
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Definition of Stopping Stock
Stopping stock is a courtesy offered by a designated market maker to public customers. When the DMM is stopping stock for a public customer, the designated market maker guarantees a price but tries to obtain a better price for the customer.
Applying "Stopping Stock" to Securities Exams:
If the designated market maker feels that the spread in the stock is too wide or that a better execution my be available for the order the DMM may stop stock for the customer. Stopping stock guarantees a price while trying to find a better price for the order and stopping stock will cause the spread to narrow. If the Stock trades away from the customer’s limit price or the best price available to a market order at the time the the order was presented, the DMM must fill the order out of their own account.