Rule 48, also known as Exemptive Relief — Extreme Market
Volatility Condition,
was a mechanism used by the
New York Stock Exchange
The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...
to ease market opening while volatility is high. It may have the effect of pre-empting trading at disrupted prices,
as the designated
market maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the difference, which is called the ''bid–ask spread'' or ''turn.'' Thi ...
s do not have to disseminate price indications prior to the opening bell.
It was approved in 2007 and repealed in 2016.
History
Rule 48 was approved by the
U.S. Securities and Exchange Commission
The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...
on December 6, 2007.
It was invoked 77 times from 2008 to September 2015, but only used a few times.
For example, it was used on January 22, 2008, and May 20, 2010,
as well as September 1, 2015.
In the aftermath of disorderly trading on August 24, 2015, the NYSE proposed new rules replacing Rule 48 to handle volatility at market opening. These rules were approved by the SEC in July 2016.
References
New York Stock Exchange
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