Nasdaq will not launch its Volatility Guard next month as planned.
Because the industry is moving towards a Limit up/Limit down circuit breaker approach to pausing trading in volatile securities, Nasdaq has decided to suspend implementation of its proprietary circuit breaker, the exchange operator said in a notice to its members on Friday.
"NASDAQ OMX recognizes that there should be a unified market solution for managing severe market volatility," Nasdaq stated.
The Nasdaq Volatility Guard, which was approved by the Securities and Exchange Commission in March, would’ve automatically suspended trading in a stock for one minute if the price exceeded certain thresholds, measured over the preceding 30 seconds. It would’ve covered the 100 stocks in the Nasdaq 100 Index.
The exchange operator stated that it reserved the right to launch its Volatility Guard at a later date if it deemed it "appropriate."
Nasdaq had planned to implement the Volatility Guard on all three of its stock exchanges.
