Friday, January 28, 2011

Equity Technical Update #2011 - 1
Testing for Reg SHO Changes Available Saturday, February 12, 2011 and Saturday, February 26, 2011

What you need to know:

  • NASDAQ OMX® will offer testing on Saturday, February 12, 2011, and Saturday, February 26, 2011, for its support of the Regulation SHO (Reg SHO) short sale circuit breaker on The NASDAQ Stock Market® (NASDAQ®), NASDAQ OMX BXSM (BXSM) and NASDAQ OMX PSXSM (PSXSM). The NASDAQ ACTSM system will also offer Saturday testing. Firms should email NASDAQ OMX Trading Services to register for the test.
  • Additional testing for Reg SHO changes will be available through the NASDAQ OMX Testing Facility (NTF) during its regular hours of operation.
  • Updated 2/21/2011: Reg SHO testing in the NTF and nightly SIP testing has been extended to March 4, 2011.
  • Firms can sign up for the NASDAQ OMX Short Sale Monitor, announced in Equity Trader Alert #2011-6, by filling out the Front End Request Form. Firms are also encouraged to register to receive short sale circuit breaker alerts by submitting the enrollment form on the NASDAQ OMX Trader® website.

What will be offered?

On Saturday, February 12, 2011, and Saturday, February 26, 2011, NASDAQ OMX will offer testing for the Reg SHO short sale circuit breaker on NASDAQ, BX and PSX, as announced in Equity Technical Update #2010-13. NASDAQ ACT will also offer testing in support of the changes to Reg SHO on February 12th and February 26th. Firms should email NASDAQ OMX Trading Services to register for the test.

As announced in Equity Technical Update #2010-21, the NASDAQ Testing Facility will support testing of Reg SHO changes during its regular hours of operation. Please note that Reg SHO testing in the NTF and nightly SIP testing has been extended to March 4, 2011.

When is testing available?

NASDAQ OMX production systems will be available for pre-market trading in all securities at 9:00 a.m., Eastern Time (ET), followed by a market open at 9:30 a.m., ET.

A market close event will be scheduled for 12:00 p.m., ET.

What functionality will be tested?

NASDAQ OMX plans to attempt the following scenarios during the Saturday testing:

Scenario #
Scenario Symbol Approximate Time Notes
1
Short sale circuit breaker triggered intraday ZRAN 10:00-10:10
2
Short sale circuit breaker triggered intraday and then subsequently revoke the circuit breaker due to the trades being deemed erroneous DAVE 10:10-10:20 Triggered at ~10:10 and reset at ~10:20
3
Short sale circuit breaker changed from a state of 2 (2nd day of circuit breaker) back to a state of 1 (1st day of a circuit breaker), which will then be reset back to a state of 2 due to the trades being deemed erroneous MNKD 10:20-10:30 Triggered at ~10:20 and reset at ~10:30
4
Symbol will start the day in a state of 2 to signify the 2nd day of the short sale circuit breaker ERIC Start of Day Symbol will open with Reg SHO restriction in effect. New opening cross functionality may be tested.
5
Short sale circuit breaker will be extended due to the circuit breaker being re-triggered and will revert back to a state of 1 CADX 10:35-10:45
6
Trigger a single stock circuit breaker and a short sale circuit breaker at approximately the same time JDSU 10:45-10:55 Halt cross may be tested upon resumption from single stock trading pause.
7
Trigger a single stock circuit breaker without triggering a short sale circuit breaker CPWR 10:55-11:05
8
Closing Cross ZRAN, MNKD, ERIC, CADX, JDSU 12:00 New short sale closing cross functionality may be tested with any symbol that triggers the circuit breaker during the testing session

NASDAQ OMX asks that participants refrain from trading in the above securities to allow for controlled testing. The above securities will be in a halted state until the testing occurs.

How will NASDAQ OMX communicate when each scenario will take place?

NASDAQ OMX will use its System Status page to communicate exactly when each scenario will be tested.

Who should customers contact if they have questions during testing?

Customers should contact the NASDAQ OMX Trade Desk at +1 212 231 5100.

Will short sale circuit breakers be able to be initiated by firms in other securities?

Yes, firms may trade all of the other securities and circuit breakers will be triggered if the trading meets the circuit breaker threshold.

What will the NASDAQ ACT test include?

The NASDAQ ACT System test will support full ACT functionality, including trade entry and unsolicited message (UM) generation through trade dissemination.

How will Reg SHO changes be supported in the NASDAQ OMX Testing Facility?

The symbols below will be configured with the corresponding Reg SHO Short Sale Price Test Restricted Indicators. The indicator for all other symbols will be “0.”

  • XRAY – 1
  • MSFT – 1
  • PZZA – 1
  • COCO – 2
  • MIND – 2
  • TSCM – 2

What tools are available to help prepare for the Reg SHO short sale rule?

As announced in Equity Trader Alert #2011-6, the NASDAQ OMX Short Sale Monitor will be available to firms in beta mode beginning Thursday, February 24, 2011. Alerts will be generated starting February 28, 2011, in conjunction with the effective date of the Reg SHO rule. The Short Sale Monitor will be free through March 31, 2011. Firms can sign up now by filling out the Front End Request Form.

NASDAQ OMX is offering the ability to self select news delivery specific to short sale circuit breakers. Register to receive short sale circuit breaker alerts by submitting the enrollment form on the NASDAQ OMX Trader website.

Where can I find additional information?



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