Tuesday, July 28, 2020
Equity Trader Alert #2020 - 44
Nasdaq, BX and PSX Introduce New Risk Controls and Updates to Kill Switch
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Subject to SEC filing requirements, effective August 24, 2020, The Nasdaq Stock Market, Nasdaq BX and Nasdaq PSX (collectively, “Exchanges”) will introduce the following updates to the Kill Switch functionality:
Renaming of the NNRECurrently, Kill Switch allows customers to set a limit for the NNRE control, which calculates the total notional value of all executions against the limit set by the firm. The NNRE will be renamed to “Gross Executed Risk Exposure”. For firms that currently have an NNRE limit set, no action is required as those limits will remain. New Gross Notional Risk ExposureThe Exchanges will introduce a new risk control, Gross Notional Risk Exposure, in the Kill Switch. The Gross Notional Risk Exposure calculates the total notional value of all executions and open orders against the value set by the firm. Both the Gross Executed and Gross Notional Risk Exposure controls are available for optional use by member participants and/or the participant’s clearing firm (as requested by the participant). For additional information, please refer to the Kill Switch FAQ. Subject to SEC filing requirements, effective September 14, 2020, the Exchanges will also introduce a new port-level risk control, Maximum Single Order Notional Check. The Maximum Single Order Notional Check will calculate the notional value of each incoming order against the value set by the firm. For purposes of this calculation, market priced orders will be priced to the opposite side of the NBBO, and if there is no NBBO, the prior day’s official closing price will be used. |
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Nasdaq (Nasdaq: NDAQ) is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. Through its diverse portfolio of solutions, Nasdaq enables customers to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today's global capital markets. As the creator of the world's first electronic stock market, its technology powers more than 90 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to approximately 3,900 total listings with a market value of approximately $13 trillion. To learn more, visit: business.nasdaq.com.