FINRA proposes to revise FINRA Rule 6121, Trading Halts Due to Extraordinary Market Volatility, and FINRA Rule 6272, Character of Quotations, to Include all NMS Stocks.  FINRA would like to effect the rule changes on an accelerated basis, so that they may become operative "ASAP."   

The rule changes would impact ...

• the trading halt pilot program under Rule 6121 so that all NMS stocks are covered by the trading pause pilot rules of a primary listing market. 
  
• the quotation requirements on the ADF under Rule 6272 to conform to those in place on the national securities exchanges. 

        Trading Halt Changes.   FINRA Rule 6121.01 provides that if a primary listing market has issued an individual stock trading pause under its rules, FINRA will halt trading otherwise than on an exchange in that security until trading has resumed on the primary listing market. The pilot was developed and implemented as a market-wide initiative by FINRA and other SROs in consultation with Commission staff, and is currently only applicable to the S&P 500 index, the Russell 1000 Index and a pilot list of Exchange Traded Products (“ETPs”). 

FINRA, along with other SROs, now is expanding the scope of the trading pause pilot to include all NMS stocks that are not already included therein.  In particular, the proposed additional stocks are those not currently included in the S&P 500 Index, Russell 1000 Index, or the pilot list of ETPs, and therefore are more likely to be less liquid securities or securities with lower trading volumes.  Accordingly, consistent with the approach of the primary listing markets, broader threshold move percentages would be appropriate for these securities.  Similarly, because leveraged ETPs trade at a ratio against the associated index, a broader threshold move percentage would also be appropriate for leveraged ETPs.  FINRA and other regulators continue impact of trading halts in the pilot program.

        Quotation Requirements.   In 2010, the SEC approved amendments to FINRA Rule 6272 to ensure consistency in quotation requirements across markets by imposing the same limitations on a Registered Reporting ADF Market Maker’s quotations to those that a market maker on national securities exchanges must follow.  At the time, the amendments were intended to eliminate trade executions against market maker “placeholder” quotations that are priced far away from the inside market, commonly known as “stub quotes.”

For further details, go to:   [FINRA Rule Filing 11-23, 5/4/11]