- Regulatory Newsletters
- NASDAQ OMX REGWATCH
- Current Regulatory Initiatives
- Market Access Rule
- Limit Up/Limit Down
- CFTC-SEC Advisory Committee
- Amendments to RegSHO
- Consolidated Audit Trail
- Large Trade Reporting
- Market Maker Obligations
- Single Stock Circuit Breakers
- Clearly Erroneous Improvements
- Market Structure Concept Release
- Market Wide Circuit Breakers
- Regulation SCI
- Contact Information
Current Regulatory Initiatives
NASDAQ OMX is always committed to working with regulators, exchanges and market participants to ensure trading is transparent and fair. To keep you informed of the ever-changing regulatory landscape of U.S. trading, refer to the information below regarding current regulatory initiatives.
|Limit Up-Limit Down Proposal|
On April 5, 2011, national securities exchanges and FINRA filed a proposal to establish a new "limit up-limit down" mechanism to address extraordinary market volatility in U.S. equity markets. Under the proposal, the mechanism would prevent trades in listed equity securities from occurring outside of a specified price band, which would be set at a percentage level above and below the average price of the security over the immediately preceding five-minute period. To accommodate more fundamental price moves, there would be a five-minute trading pause - similar to the pause triggered by the current circuit breakers - if trading is unable to occur within the price band for more than 15 seconds. The Limit Up-Limit Down plan is designed to replace the existing single stock circuit breakers in phases.
On July 18, 2013, the SEC approved Amendment #4 to the Plan to divide the implementation of Phase 2 into two stages. In the first stage of Phase 2, all Tier 2 NMS stocks were implemented beginning the week of August 5th, 2013 and ended the week of September 3rd, 2013. Starting on August 5th, 2013, the LULD bands begin at 9:30 a.m. E.T. and end at 3:45 p.m. ET each trading day, or fifteen minutes before the close in the case of an early scheduled close. The amended band times will apply to all the Tier 1 symbols and the Tier 2 symbols. In December, the NMS Plan Participants filed Amendment #6 that is immediately effective to include the last 15 minutes of regular trading starting February 24, 2014. Therefore, starting Monday, February 24th 2014, the LULD bands will begin at 9:30 a.m. E.T. and end at 4:00 p.m. ET each trading day. The addition of the last 15 minutes of trading will apply to all NMS Stocks.
|Large Trader Reporting System|
On April 14, 2010, the SEC proposed new Rule 13h-1 and a corresponding Form 13H to establish a new large trader reporting system. The system would require large traders to self-identify and file reports with the SEC. Additionally, the rule places recordkeeping, reporting and monitoring responsibilities on broker-dealers with respect to large traders maintaining accounts with them.
On July, 27th, 2011, the SEC approved the Large Trader Reporting filing with a rule effective date of October 3, 2011 and an initial compliance date for the requirement on larger traders to identify to the SEC as December 1, 2011. On April 23, 2012, the SEC issued an order temporarily exempting broker-dealers from recordkeeping, reporting and monitoring requirements that was scheduled to go into effect on April 30, 2012. The order also granted permanent exemption from the definition from the term "transaction" for certain capital market transactions.
For broker-dealers that are (1) large traders or (2) have large trader customers that are either broker-dealers or that trade through a "sponsored access" arrangement must be in compliance by November 30, 2012. For all other registered broker-dealers the compliance date was recently granted an extension from May 1, 2013 until November 1, 2013. The order provides a temporary exemption for the Phase Two broker-dealer’s recordkeeping, reporting, and monitoring requirements of Rule 13h-1.
|Market Maker Obligations|
NASDAQ OMX modified its rules surrounding "stub" quotes within The NASDAQ Stock Market's Market-Maker program. For each NMS security in which a NASDAQ member is registered as market maker, the member is required to maintain a continuous two-sided trading interest during regular market hours at prices within certain parameters expressed as a percentage reference from the National Best Bid or Offer (NBBO) as applicable (the "Designated Percentage").
On August 2, 2012, the SEC approved for use a new order type called the Market Maker Peg Order (MMPO). MPPO is designed to assist Market Makers meet their quoting obligations under Rule 4613(a). This order type will replace the AQR Tool by providing similar functionality while also meeting Reg SHO and MAR obligations. The MMPO went into effect for use October 9, 2012. AQR will be phased out by the end of 2012.
On June 14, 2012, NASDAQ OMX filed a proposed rule change to adopt a new Market Maker Peg Order that is designed to provide similar functionality available via the AQR tool. However, the new Marker Maker Peg Order is designed to also assist market makers in meeting obligations under the Market Access Rule and Reg SHO.
|Single Stock Circuit Breakers|
On June 14, 2010, in coordination with other U.S. equity exchanges, NASDAQ OMX introduced a new market-wide single stock circuit breaker functionality in S&P 500 securities. On September 14, 2010, the functionality was expanded to include Russell 1000 securities and select Exchange-Traded Products.
On June 23, 2011, the SEC approved rules to expand the functionality to the remaining Reg NMS securities and establish wider percentage price moves before a trading pause is triggered for the newly added securities (Phase III securities). The SEC also approved new market maker quoting obligations for the newly added securities. For Phase III securities, the price move required to trigger a trading pause will be 30% or more for securities priced at $1 or higher and 50% or more for securities priced less than $1. The new market maker quoting obligation for Phase III securities trading at or above $1 will be 28% away from the NBBO. The quoting obligation for Phase III securities trading below $1 will remain unchanged.
The new Limit up-Limit Down Plan will replace the existing Single Stock Circuit Breakers in phases as it rolls out.
On March 8, 2013, the Securities and Exchange Commission (SEC) proposed Regulation Systems Compliance and Integrity (“Regulation SCI”) and amendments to Regulation ATS under the Securities and Exchange Act of 1934 (“Exchange Act”).
As proposed, Regulation SCI would require “SCI entities” (e.g., certain self-regulatory organizations (SROs), alternative trading systems (ATSs), plan processors and exempt clearing agencies) to comply with capacity, integrity, security and testing requirements with respect to their automated systems that support their regulated activities.
According to the SEC, the Regulation and related amendments are needed to formalize current SEC inspection programs (ARP) and standardize industry efforts in this area. To address the increased use of technology in securities trading and routing and the resulting complexities in the markets, and help prevent systems related issues that can harm the fair and orderly operation of the markets.
On May 20, 2013, the SEC extended comment period of Reg SCI from May 24, 2013 until July 8th 2013.