NASDAQ seeks to amend price protections, paves way for new order rejection criteria

In a filing which was issued by the SEC yesterday, NASDAQ states that it proposes to amend the Order Price Protection within its options market in order to increase protection against risk.

Nasdaq growth record

NASDAQ, the second-largest stock exchange in the world by market capitalization, is an executing venue with extremely strict order management and trade acceptance criteria.

Yesterday, the SEC published a notice inviting comments on the New York-based global derivatives and listed stock venue plans to amend its price protection mechanisms.

Currently, NASDAQ stipulates that when the contra side National Best Bid or Offer (NBBO) or the internal market Best Bid or Offer (BBO) is at or less than $1.00, orders with a limit more than 100% through the contra side NBBO will be rejected.

Additionally, when the contra side NBBO or the internal market BBO is greater than $1.00, orders with a limit more than 50% through the contra side NBBO will be rejected. Currently, stock legs will not trade through the underlying stock NBBO by more than $0.10 and a stock tied order to sell where the stock leg is a short sale order will not execute the stock leg at a price that does not improve the NBBO bid for the underlying issue by at least a penny, if the RegSHO short sale price test is in effect for that symbol.

In a filing which was issued by the Securities and Exchange Commission (SEC) yesterday, NASDAQ states that it proposes to amend the Order Price Protection or “OPP” within The Nasdaq Options Market LLC (“NOM”) Rules at Chapter VI, Section 18, entitled, “Risk Protections.”

The text of the proposed rule change is available on the Exchange’s Website, at the principal office of the Exchange, and at the Commission’s Public Reference Room.

In its filing with the SEC, NASDAQ included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change.

Rationale behind the amendment

According to the SEC filing, the purpose of the proposed rule change is to amend Chapter VI, Section 18, entitled, “Risk Protections.” Specifically, the Exchange proposes to amend the Order Price Protection or “OPP” functionality at Chapter VI, Section 18(a) to propose an alternative method to determine parameters for this risk protection; and memorialize certain rule text within Chapter VI, Section 18.

NASDAQ notes that OPP is intended to prevent erroneous executions of orders on NOM. This proposal seeks to further this objective by introducing a fixed dollar threshold that in combination with the existing percentage threshold will provide a modified approach to order rejection based on the price of the order.

In its current format, the OPP feature prevents certain day limit, good til cancelled or immediate or cancel orders at prices outside of certain pre-set limits from being accepted by the System. OPP applies market-wide to all options, but does not apply to market orders or Intermarket Sweep Orders. OPP is operational each trading day after the opening until the close of trading, except during trading halts.

The OPP assists Participants in controlling risk by checking each order, before it is accepted into the System, against certain parameters. Today, OPP rejects incoming orders that exceed certain parameters according to the algorithm mentioned initially in this article.

NASDAQ’s complex membership and listing criteria go hand in hand with the equally complex set of stipulations that surround executing orders on such a promient first-tier exchange, and the full documentation can be read by clicking here.

Read this next

Digital Assets

Flock.io and io.net Unite to Pave the Way for Decentralized AI Development

In an effort to create a community-driven Flock.io platform for on-chain, decentralized AI models; the leaders have decided to join hands with io.net to power Flock with decentralized computing.

blockdag

Crypto 2025: The Action Points to Follow to Capitalize on Bitcoin and BlockDAG Network’s 2025 20000X ROI Predictions

In this analysis, we delve into the price predictions for Bitcoin and BlockDAG Network, and we explore the factors driving these projections while offering actionable insights for investors that are looking to capitalize on the 20000x potential of these projects.

Retail FX

Orfinex joins Financial Commission as approved broker member

Multi-asset brokerage firm Orfinex has become a member of the Financial Commission, joining the ranks of the self-regulatory organization. This accreditation reassures traders that the firm meets the quality standards set by the commission.

Fintech

Telegram CEO’s Bitcoin stash valued in hundreds of millions

Telegram CEO Pavel Durov revealed that he has held several hundred million dollars in fiat and bitcoin for the past decade.

Digital Assets

Bitcoin drops below $60K as halving just 300 blocks away

Bitcoin fell below the $60,000 mark on April 17, just days before a scheduled reduction in mining rewards, known as the “halving,” which is set to occur on April 20.

Chainwire

New Meme Coin ICO Dogeverse Raises $6 Million After Completing Coinsult Audit

A new multichain meme coin, Dogeverse, has raised $6 million in its presale and recently passed a smart contract audit.

The new meme coin leverages bridge technology, ensuring the token is available across the most prominent on-chain markets.

Retail FX

Interactive Brokers posts Q1 earnings, raises dividend

Interactive Brokers Group Inc (NASDAQ:IBKR) announced its first-quarter financial results for the period ending March 31, 2024. The leading automated global electronic broker reported a GAAP diluted EPS of $1.61 and an adjusted EPS of $1.64.

Fundamental Analysis, Tech and Fundamental

Global FX Market Summary: USD, FED, Gold  April 17 ,2024

The Fed’s hawkish stance on interest rates is strengthening the US dollar while central banks globally grapple with inflation and economic growth.

Digital Assets

Kraken launches self-custodial wallet, joining competitors like Coinbase

Kraken, the second-largest U.S.-based cryptocurrency exchange, has introduced its own digital wallet, aligning its offerings with those of competitors like Coinbase.

<