Negative obligation

Negative Obligation
Investment Dictionary:
Negative Obligation
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Negative Obligation
An obligation of NYSE specialists to remain on the sidelines and refrain from acting as principal when there is sufficient market demand and supply to efficiently match orders.

Negative obligation
A New York Stock Exchange rule that governs the behavior of specialists.

negative obligation
negative pledge clause
negative working capital
negative yield curve
neglected firm effect
negotiable
negotiable certificate of deposit
negotiable instrument
negotiable order of withdrawal
negotiated commission ...

Notice that the firm has bailed out of XYZ at a higher price than if the order was reversed (Definition: the specialist's firm selling afterwards). Trading ahead is part of what is known as negative obligation.

See also: Yield curve, Treasury bonds, Net sales, Stock symbol, Bills