Wednesday, May 19, 2010

Equity Regulatory Alert #2010 - 3
Market-Wide Circuit Breaker Functionality Proposals Filed with the SEC

Markets Impacted:

Contact Information:

What you need to know:

  • U.S. equity exchanges seek to establish market-wide trading pause standards for all securities included in the Standard & Poor’s 500 Index (S&P 500) pending Securities and Exchange Commission (SEC) approval.

What is being implemented by U.S. equity exchanges?

In conjunction with all U.S. equity exchanges, The NASDAQ Stock Market® (NASDAQ®) and NASDAQ OMX BXSM (BXSM) have filed with the SEC a proposed rule change to establish a trading pause for individual stocks in the S&P 500 Index that experience a price change of 10% or more. This rule change will run for a pilot period.

When will the pilot period run?

The pilot period for the market-wide circuit breaker functionality is expected to be fully rolled out by June 14, 2010, pending SEC approval, and will last through December 10, 2010.

How will market-wide circuit breakers work?

If any S&P 500 security experiences a price change of 10% or more during a five-minute period, a five-minute trading pause initiated by the primary listing market for the security will commence and will be followed by all other markets. Affected securities will also be re-opened by the primary listing market.

How will NASDAQ resume trading in a NASDAQ-listed stock that is halted by the market-wide circuit breaker?

If a halt is triggered in a NASDAQ-listed security in the S&P 500 Index, NASDAQ will re-open the security using the NASDAQ Halt Cross process set forth in NASDAQ Rule 4753. Upon resumption of trading by NASDAQ and dissemination of a first print, trading may commence on other markets. Refer to NASDAQ Rule 4753 for additional details.

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. Refer to the NASDAQ and BX filings for additional details.

Where can I find additional information?

  • Refer to the NASDAQ and BX rule changes:
  • Refer to the Single Stock Trading Pause Frequently Asked Questions on the NASDAQ OMX Trader website.
  • Contact Transaction Services U.S. Market Sales at +1 800 846 0477.

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