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Tuesday, June 15, 2010

Options Regulatory Alert #2010 - 9
PHLX and NOM Announce New Halt Procedures

Markets Impacted:

Contact Information:

What you need to know:

  • In response to the events of May 6, 2010, U.S. equity markets filed with the Securities and Exchange Commission (SEC) to establish market-wide trading pause standards for all securities included in the Standard & Poor’s 500 Index (S&P 500) effective Monday, June 14, 2010.
  • The U.S. options markets have also filed with the SEC to honor trading pauses in the primary listing market for the underlying security by halting trading in options overlying such underlying security.
  • In conjunction with SEC approval of the market-wide trading pause standards, NASDAQ OMX PHLXSM (PHLX®) has amended PHLX Rule 1047 and The NASDAQ Options MarketSM (NOM) has amended Chapter V, Section 3 of the NOM rules to impose trading halts in options when trading in the underlying security has been paused by the primary listing market pursuant to the single stock circuit breaker pilot that currently applies to stocks included in the S&P 500.

What is changing?

Effective Monday, June 14, 2010, PHLX and NOM will halt trading in option contracts when trading in the underlying security has been paused by the primary listing market pursuant to the single stock circuit breaker pilot recently approved by the SEC.

What is the single stock circuit breaker pilot?

In response to the events of May 6, 2010, U.S. equity markets filed to establish market-wide trading pause standards for individual stocks included in the S&P 500 that experience a price change of 10% or more (the Single Stock Trading Pause) in any five-minute period.

Will PHLX halt option trading in response to single-market pauses?

Currently, PHLX and NOM will only halt options trading in response to a pause initiated by a primary listing market pursuant to the single stock circuit breaker pilot covering S&P 500 stocks. PHLX and NOM will not halt trading in response to single-market pauses such as the NASDAQ Volatility Guard or NYSE Liquidity Replenishment Point.

When will options trading re-open if an underlying security is halted by the primary listing market?

PHLX and NOM will resume trading in an affected option when a trade resumption message (Trading Action = T) is received over the Unlisted Trading Privileges (UTP) data feeds.

Where can I find more information?



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