The NASDAQ Stock Market LLC (Nasdaq:NDAQ) today announced a proposal to protect investors and listed companies while increasing transparency in the U.S. equity markets during times of volatile market conditions.
NASDAQ will implement a single stock circuit breaker -- the NASDAQ Volatility GuardSM -- which will pause trading based on predetermined thresholds across all NASDAQ-listed securities. The NASDAQ Volatility Guard will allow data to be universally available before, during and after the trading pause. Additionally, the reopening process will be available to all market participants for better price discovery.
The NASDAQ Volatility Guard will supplement the coordinated effort by the Securities and Exchange Commission (SEC) and U.S. exchanges for an initial pilot program ending December 10th, which establishes a trading pause for individual stocks within the Standard & Poor's 500 Index that experience a price change of 10 percent or more.
"NASDAQ's Volatility Guard will protect investors and increase transparency by preventing anomalous trades like the ones that took place on May 6th, while supporting market-makers who bring liquidity to the investor community and our listed companies," said Bob Greifeld, Chief Executive Officer NASDAQ OMX.
The NASDAQ Volatility Guard will go into effect in the third quarter of 2010.
For more information on the NASDAQ Volatility Guard including a video message from Bob Greifeld, the SEC filing and the Wall Street Journal announcement please visit: http://www.nasdaqomx.com/volatilityguard
