New US Markets Trading Rules 612 and 614 (wef 11 April 2011) 

The US stock exchanges and self regulatory organization (SROs) has recently formulated new policies to further enhance the control on clearly erroneous orders (i.e.Trades resulting from a market participant placing a transaction or series of transactions that adversely affect the market price of a security).
 
Effective from 11 April 2011, the following rules shall apply:

(i) Rule 612 – Check on order size relative to Average Daily Volume
All orders greater than 9,999 shares will be rejected if the order size exceeds 10% of the 30-day average daily volume. For example, a 10% of the average 30-day volume of 300,000 shares will be 30,000 shares. For orders with placement quantity 30,001 or more, the order will be rejected. Customers will be required to reduce the order quantity and re-submit the order.
 
Note :
The above shall not apply to new issues/IPO on the first day of trading. However, it will be subjected to the above rule based on the subsequenty day average (i.e. on the 2nd day of trading, it will be compared to a 10% of the 2-day average volume).
 
(ii) Rule 614 – Comparison of order price based on 5% away from the prevailing Best Bid/Offer price
Order price that is 5% away from the prevailing Best Bid/Offer price will be rejected. Customers will be required to amend the order price and re-submit the order.

Last updated on 13 April 2011

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