Skip to main content

SEC Issues Order Modifying and Extending the Pilot Period for the National Market System Plan to Address Extraordinary Market Volatility


Washington D.C., April 21, 2016 —

The Securities and Exchange Commission today issued an order to extend for one year the pilot period of the National Market System Plan to Address Extraordinary Market Volatility, commonly known as the limit up-limit down (LULD) plan.  

The Commission also approved a modification to the manner in which the LULD plan establishes the reference price in cases where a security does not trade in the opening auction on the primary listing exchange.  In these circumstances, a security’s reference price will now be the previous trading day’s closing price or, if no closing price exists, the last reported sale on the primary listing exchange.  The Commission believes that this modification is appropriate to potentially prevent unnecessary trading pauses that are unrelated to extraordinary volatility.

The Commission extended the pilot period in order to allow the plan participants to conduct further analysis regarding the LULD plan’s operation, including how it operated during the market volatility on Aug. 24, 2015.  In particular, the Commission has directed the self-regulatory organization (SRO) participants to submit to the Commission further recommendations, as necessary, relating to: 

  • The appropriate harmonization of the SRO clearly erroneous execution rules with the plan such that trades that occur within the LULD price bands would not be broken absent legitimate technical failures
  • The establishment of specific provisions relating to the trading of exchange-traded products
  • Other changes deemed warranted in light of the market volatility on Aug. 24, 2015, including the impact of double-wide price bands during the opening period, and the advisability of coordinated reopening procedures
  • Potential enhancements to the categorization of securities into different tiers

The order is effective immediately.  The pilot period will expire on April 21, 2017.  


Return to Top