On August 20, NASDAQ filed a proposed rule change with the Securities and Exchange Commission, which seeks to amend Chapter VI, Section 6, entitled “Acceptance of Quotes and Orders,” of the rules governing the NASDAQ Options Market (NOM), by adopting an optional “Kill Switch” protection. The Kill Switch would provide firms with a powerful risk management tool by allowing NOM participants to remove quotes, cancel open orders and prevent new order submissions, giving them immediate control of their quote and order activity. If NOM participants opt to cancel orders by utilizing the Kill Switch, they must send a message to NASDAQ requesting cancellation of the specific orders they would like cancelled.
Though NASDAQ currently offers risk mitigation and management tools, including rapid fire risk controls and order price protections, the Kill Switch offers NOM participants a way to control their exposure that is not dependent on their own systems.
Comments should be submitted on or before September 10.
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