On 9/14, FINRA’s individual stock trading-pause (aka "single-stock circuit breaker") pilot was expanded to include securities in the Russell 1000 Index as well as a pilot list of exchange traded products (ETPs).  On 9/10, FINRA’s clearly erroneous rules were amended, also on a pilot basis.  Both pilots are set to end on 12/10/10. 

Consistent with the original pilot, which was adopted 6/10/10, the expanded pilot provides that whenever a primary listing market issues a trading pause in a security, FINRA will similarly halt OTC trading by FINRA member firms, including alternative trading systems (ATSs) and market makers (MM's).  As was the case under the original pilot, FINRA will generally halt OTC trading until trading has resumed on the primary listing market.

    FINRA Rule 11892.   The SEC also approved amendments to FINRA Rule 11892, Clearly Erroneous Transactions in Exchange-Listed Securities, that include changes to clarify the process for reviewing potentially erroneous trades in exchange-listed securities.  The amendments are intended to, among other things, provide for uniform treatment of clearly erroneous reviews of:  (i) multi-stock events involving 20 or more securities;  and (ii) transactions that trigger an individual stock trading pause by a primary listing market and subsequent transactions that occur before the trading halt is in effect for OTC trading. 

With respect to multi-stock events, the amended rule creates a new category - multi-stock event involving 20 or more securities - to address clearly erroneous reviews regarding executions in 20 or more securities that occur within a period of 5 minutes or less.  Once a multi-stock event is triggered, FINRA will coordinate with the exchanges and nullify as clearly erroneous all transactions at prices equal to or greater than 30% away from the reference price in each affected security, as set forth in Rule 11892 (b)(1)). 

For further details, click onto:   [ FINRA RegNote 10-43, September ]