Nasdaq Circuit Breaker to Limit Wild Swings in Single Stocks

The Nasdaq Stock Market LLC said today that it will implement a single circuit breaker aimed at protecting investors and listed companies during times of volatile market activity.

The exchange operator is rolling out the Nasdaq Volatility GuardSM, which is designed to pause trading when certain predetermined thresholds are reached across all Nasdaq-listed securities.

Nasdaq said the circuit breaker will allow data to be universally available before, during and after the trading pause.

“Nasdaq’s Volatility Guard will protect investors and increase transparency by preventing anomalous trades like the ones that took place on May 6,” Nasdaq OMX chief executive Bob Greifeld said in a statement.

The Nasdaq Volatility Guard is slated to go live during the third quarter this year. The company said the breaker is intended to supplement a pilot program coordinated by the U.S. Securities and Exchange Commission and U.S. exchanges which established trading pauses for individual S&P 500 stocks that see price changes of 10 percent or more.

That program ends Dec. 10.

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio