Resumption of Trading for Paused or Halted LULD Securities

IEX Trading Alert #2016 - 040

Overview

On July 22, 2016, FINRA filed a rule change with the SEC and issued Regulatory Notice 16-26 to clarify the operation of the Regulation NMS Plan to Address Extraordinary Volatility ("LULD Plan") following a trading pause or regulatory halt in a security subject to the LULD Plan.

Specifically, amended FINRA Rule 6121.01 provides that, following a trading pause or regulatory halt in an NMS stock that is subject to the LULD Plan, a firm may resume trading otherwise than on an exchange if trading has commenced on the primary listing exchange (or on another national securities exchange in the case of the resumption of trading following a ten-minute trading pause)1 and either: (1) the firm has received the price bands from the processor; or (2) if immediately following a trading pause or regulatory halt the firm has not yet received the price bands from the processor, the firm has calculated an upper price band and lower price band consistent with the methodology provided for in Section V of the LULD Plan and ensures that any transactions prior to the receipt of the price bands from the processor are within the ranges provided for pursuant to the plan, consistent with Section VI(A)(1) of the LULD Plan.

IEX Impact

Beginning August 18, 2016, a security subject to a trading pause or regulatory halt will not resume trading on IEX during the Regular Market Session until trading has both commenced on the primary listing exchange (or on another national securities exchange in the case of the resumption of trading following a ten-minute trading pause) and the price bands are received from the SIP. During the Pre- and Post-Market Sessions, IEX will resume trading of a security immediately after receipt of either a unhalt message or trading has commenced on the primary listing exchange (without the need to wait for price bands).

Please note that IEX will not discern between securities subject to the LULD Plan and those not subject to the LULD Plan at this time. Therefore securities not subject to the LULD Plan will remain halted on IEX for the remainder of the trading day if they were first halted and then unhalted during the Regular Market Session.

Initial Public Offerings ("IPOs")

Following an IPO, the security will not begin trading on IEX until the price bands are received from the SIP. This condition will hold even after the initial trade is printed on the primary listing exchange.

More Information

Please contact IEX Market Operations or Sales with any questions:

Endnotes

1. Where the primary listing exchange does not re-open for trading at the end of a ten-minute trading pause (and has issued notice that it cannot resume trading for a reason other than a significant imbalance), a firm may resume trading otherwise than on an exchange if trading has commenced in such NMS stock on at least one other national securities exchange if the other requirements of the rule are met.

About IEX

IEX is on a mission to build fairer markets. Founded in 2012 and headquartered in New York City, IEX introduced its first trading venue in 2013 and launched as a U.S. stock exchange in 2016. IEX is the stock exchange that believes that every investor has the right to trade on equal and fair terms, on every trade. Learn more at: iextrading.com.