Thursday, September 30, 2010

Equity Regulatory Alert #2010 - 14
NASDAQ OMX Announces Update to Single Stock Circuit Breaker in NASDAQ-Listed Securities

Markets Impacted:

Contact Information:

What you need to know:

  • NASDAQ OMX® has announced updates to the market-wide trading pause functionality for NASDAQ-listed securities.
  • The NASDAQ Stock Market® (NASDAQ®) will only invoke the Single Stock Trading Pause upon the third execution at or above the 10% threshold and through the National Best Bid or Offer (NBBO) within a five-minute period.
  • NASDAQ OMX BXSM (BXSM) will recognize any trading pause issued by NASDAQ.
  • Refer to the NASDAQ comment letter and SEC Release No. 34-62884 for more information.

What is changing?

In an effort to eliminate unnecessary use of the Single Stock Trading Pause due to erroneous executions, NASDAQ submitted a proposal to add functionality that could prevent a potential erroneous execution from triggering a Single Stock Trading Pause in the first instance.

What is the new Single Stock Trading Pause functionality?

Previously, the functionality would trigger a trading pause if an execution is at or higher than the threshold move, which is currently set at 10% either direction from the last consolidated sale, and is through the NBBO. NASDAQ will no longer invoke a trading pause based on that single transaction.

Instead, NASDAQ will wait until the third such execution that is at or above the threshold move and through the NBBO within a five minute period before invoking the Single Stock Trading Pause.

However, if an execution is at or higher than the threshold move and is also at or within the NBBO within the five-minute period, NASDAQ will invoke a trading pause based on that single transaction.

How does this affect trading on BX?

BX will recognize any trading pause issued by NASDAQ and will not resume trading until the security is re-opened on NASDAQ.

Will NASDAQ and BX recognize trading pauses issued by another primary market?

Yes. In such a situation, NASDAQ and BX will pause trading in that security until trading has resumed on the primary listing market.

Where can I find additional information?

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