NASDAQ, NYSE and Bats team up to take on SEC

The Exchanges have been working together on initiatives aimed at improving LULD and trading pause rules from the SEC.

NASDAQ, Bats Global Markets and the New York Stock Exchange (NYSE) have teamed up in an attempt to overrule regulations approved by the Securities Exchange Commission (SEC) in the US.

The group - simply known as ‘Exchanges’ – have confirmed they will be filing a set of exchange rules and update the limit-up, limit-down (LULD) rules approved by the SEC.

The Exchanges have four key focuses; eliminating time periods trading can continue without LULD bands, reducing trading pauses, achieving standardisation of primary exchange re-openings following a trade pause, and the elimination of clearly erroneous execution (CEE) rules when LULD is in effect.

Over the past year, the exchanges have been working together to introduce systematic protections to prevent trades in the interval between LULD halt resumption, it said.

The group has also implemented a pricing system, which sees closing prices allocated to opening prices when no open print is available on the primary exchange.

It said since this has been enforced, there has been a 75% reduction in “spurious LULD trading pauses”.

The Exchanges explained they are working together to strengthen US equity markets, “by harmonising key functions of the US equity markets to increase resiliency during times of extreme volatility”.