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The NYSE has made a rule filing with the SEC to rescind Rule 80A, or index arbitrage trading restrictions known as "trading collars." The rule will be effective on the date it is posted to the SEC website. Therefore, Rule 80A, which has applied solely to the NYSE market and not to other equities exchanges or trading platforms, will no longer be in effect on the NYSE.
Given the fact that the Rule 80A Trading Collars had applied only to the NYSE and not to other exchanges or trading platforms (such that program trading does occur elsewhere when suspended on the NYSE), we believe that the rule had not effectively been serving its original or fundamental purpose of stabilizing markets during periods of especially volatile trading.
Note, too, that this action does not apply at all to the market-wide Circuit Breakers, Rule 80B (Trading Halts Due to Extraordinary Market Volatility), which remains in effect.
Please click here for the complete rule filing.
Please click here for information bulletin to Member Firms on Rule 80A.
Background on Rule 80A, Trading Collars
Based on the positive or negative movement beyond pre-established thresholds in the NYSE Composite Index (NYA), Rule 80A trading collars required that any index arbitrage order, or program trade in a component stock of the S&P 500 Stock Price IndexSM must be entered as either "buy minus" or "sell plus" order.
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