SIE (Securities Industry Essentials) Practice Exam

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What violation occurs when a market maker fails to honor its quote for at least one round lot on both sides of the market?

Quoting violation
Failure to execute
Market manipulation
Backing away violation

The correct answer is: Backing away violation

When a market maker fails to honor its quote, it is considered a backing away violation. This occurs when the market maker fails to execute at least one round lot on either the bid or ask side of the market. This is different from a quoting violation, which occurs when a market maker's quote is not in compliance with regulations. Failure to execute refers to the failure to execute a trade fully. Market manipulation involves artificially inflating or deflating the price of a security for personal gain.