Friday, February 21, 2014

Equity Trader Alert #2014 - 16
NASDAQ OMX Announces Equity Market Net Notional Value Kill Switch

Category:

  • New Functionality

Markets Impacted:

Contact Information:

Resources:

In order to protect market participants and promote market stability, a Kill Switch will be introduced on Thursday, March 6, 2014 for The NASDAQ Stock Market® (NASDAQ®), NASDAQ OMX BXSM (BXSM), and NASDAQ OMX PSXSM (PSXSM). Market participants may optionally establish Net Notional Value limits for each market center for each of their MPID’s. NASDAQ encourages participants to use the Kill Switch for all or some of their MPID's to better protect themselves and the market from unnecessary risk exposure.

How it Works

Net Notional Limits accumulate throughout a given trading day (including pre and post market extended hours trading). Net Notional Limits are not accumulated over multiple trading days and are calculated separately for each NASDAQ Market center. In the event the established limit is met or exceeded NASDAQ will disallow new order entry for that MPID on the market center where the limit is reached, and all open orders on that market center will be cancelled back via normal means. Cancellations are subject to the exchange's rules.

Accessing the Kill Switch and Set Limits

Access to the Kill Switch Web GUI will be available via the NASDAQ Infocenter. Firms may request individual accounts on Infocenter to gain access to the Kill Switch, per MPID, for view-only or with limit modification permission. The Kill Switch will provide notification, via email and the Kill Switch website, when thresholds have been met throughout the course of the trading day (including warnings when an MPID has reached 50/75/85/90/95% of their Net Notional Limit settings). Each Infocenter account associated with the Kill Switch for that MPID would receive these notifications.

In the event a limit is breached, authorized participant representatives must contact NASDAQ OMX Trading Services to be permitted access to the market.



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