NYSE Seeks To Eliminate Rule 48 By Revising Existing Rules

The New York Stock Exchange wants to abolish one of its controversial rules, Rule 48, last used during volatile trading in August. The rule allows market makers to delay opening a stock when markets are volatile and was widely criticized and blamed for exacerbating big swings on August 24, when the S&P 500 and Dow industrials plunged shortly after the open. The exchange plans to file proposed revisions with the Securities and Exchange Commission to "enhance and simplify" Rule 15 and Rule 123D, which would eliminate the need for Rule 48, according to an NYSE spokesperson. A revised Rule 15 would require market makers to manually publish pre-opening indications if prices change 5% or more. On extremely volatile days, defined by a 2% price change in E-mini S&P 500 futures as of 9:00 a.m. Eastern, market makers would be required to open individual stocks manually when prices move 10% or more in pre-market trade. A revised rule 123D would allow market makers to open securities electronically unless there is a price change of 4% from the last sale or if the opening trade would be more than 100,000 shares. On volatile days the percentage requirement would be doubled.