NEW YORK, Aug. 11, 2016 (GLOBE NEWSWIRE) -- The three major exchange groups, Bats Global Markets (Bats), Nasdaq and the New York Stock Exchange (NYSE), (collectively, ‘the exchanges’) have worked together to harmonize key functions of the U.S. equity markets to increase resiliency during times of extreme volatility.
In the coming weeks the exchanges will file with the Securities and Exchange Commission (SEC) a set of exchange rules as well an update to the National Market System Plan to Address Extraordinary Market Volatility (“LULD Plan”). The LULD Plan was approved on a pilot basis by the SEC in 2012 and is designed to prevent trades in individual securities outside of specified price bands (“LULD Bands”).
The exchanges’ goals are focused on four key areas:
- Eliminating the time periods where securities could trade without LULD Bands in place;
- Reducing the number of Trading Pauses;
- Standardization of primary exchange automated re-openings following a Trading Pause; and,
- Elimination of Clearly Erroneous Execution (“CEE”) rules when LULD Bands are in effect.
Updates on some of the joint-initiatives undertaken during the last year to meet these goals include:
Leaky Band Protections
- Working together, the three exchanges have, or are in the process of implementing, systematic protections to prevent trades in the interval between LULD halt resumption and the publication/receipt of new LULD Bands. This effort is designed to reduce subsequent trading halts and price dislocations.
Amendment 10 Implementation
- The exchanges implemented coordinated changes to use the previous day’s closing price as the reference price at the open on occasions when no opening print is available on the primary exchange. Since the implementation of these changes, there has been approximately a 75% reduction in spurious LULD Trading Pauses.
- Analysis of the impact of Amendment 10 will be published in the coming months.
Amendment 11 Implementation
- All three exchange groups have finalized, and will be soon submitting to the SEC, changes to the LULD Plan that align LULD parameters to improve the price discovery process after a Trading Pause. This represents a key output of the LULD Operating and Advisory Committees.
Plans for Eliminating the Need for CEE Rules
- The exchanges are currently conducting further data-driven analysis, and are considering market participant feedback to recommend changes to, or elimination of, CEE rules.
In addition to the collective efforts detailed above, each exchange group has implemented its own initiatives to improve the stability and resiliency of their respective markets. More information about these initiatives is available on the websites of Bats, Nasdaq and NYSE.
Bats Global Markets, Inc., is a leading global operator of exchanges and services for financial markets, dedicated to Making Markets Better. We are the second-largest stock exchange operator in the U.S., operate the largest stock exchange and trade reporting facility in Europe, and are the #1 market globally for ETF trading. We also operate two fast growing U.S. options exchanges. In the global foreign exchange market, we operate Hotspot. ETF.com, a leading provider of ETF news, data and analysis, is a wholly-owned subsidiary. The company is headquartered in Kansas City with offices in New York, London, Chicago, San Francisco, Singapore and Quito, Ecuador. Visit bats.com and @BatsGlobal for more information.
Nasdaq (Nasdaq:NDAQ) is a leading provider of trading, clearing, exchange technology, listing, information and public company services across six continents. Through its diverse portfolio of solutions, Nasdaq enables customers to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today's global capital markets. As the creator of the world's first electronic stock market, its technology powers more than 70 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to more than 3,700 listed companies with a market value of approximately $9.6 trillion and nearly 10,000 corporate clients. To learn more, visit: nasdaq.com/ambition or business.nasdaq.com.
About NYSE Group
NYSE Group is a subsidiary of Intercontinental Exchange (NYSE:ICE), a leading operator of global exchanges and clearing houses, and a provider of data and listings services. NYSE Group includes exchanges, market data and connectivity services. The equity exchanges -- the New York Stock Exchange, NYSE MKT and NYSE Arca -- trade more U.S. equity volume than any other exchange group. NYSE is the premier global venue for capital raising, leading worldwide in IPOs, including technology IPOs. NYSE Arca Options and NYSE Amex Options are leading equity options exchanges. To learn more, visit www.nyse.com/index
About Intercontinental Exchange
Intercontinental Exchange (NYSE:ICE) operates the leading network of global futures, equity and equity options exchanges, as well as global clearing and data services across financial and commodity markets. The New York Stock Exchange is the world leader in capital raising, listings and equities trading.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located at www.intercontinentalexchange.com/terms-of-use.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the SEC on February 4, 2016.
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