Continuing the educational series of trading circuit breakers, today I present the data on when Goldman Sachs may finally be prohibited from mass funnelling in and out of the NYSE program market. The answer is: Never.
On November 7, 2007 the NYSE removed the trading curb limitation for violent market moves.
The NYSE formerly implemented a curb on program trading whenever the NYSE Composite Index moved 190 points or more from its previous close, and remained in place for the rest of the trading day or until the gain or loss had decreased to 90 or fewer points. This curb permitted program sales to be executed only on upticks and program buys on downticks. A program trade is defined by the NYSE as a basket of stocks from the S&P 500 where there are at least 15 stocks or where the value of the basket is at least $1 million. Such trades are generally computer automated. Since over 50% of all trades on the NYSE are program trades, this curb limited volatility by mitigating the ability of automated trades to drive stock prices down via positive feedback.
It is Zero Hedge's view that the NYSE might be well advised to reconsider bringing back the curbs rule.
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