OREANDA-NEWS. January 31, 2017.  As previously stated in Equity Trader Alert 2016 – 172, The Nasdaq Stock Market LLC (“Nasdaq”), NASDAQ BX, Inc. (“BX”) and NASDAQ PSX (“PSX”) are implementing new price protections on incoming limit orders that exceed calculated pre-set standard limits. The new protections are designed to prevent the execution of erroneous orders. These protections will go into effect beginning February 6, 2017.

With the new Limit Order Protection (LOP), Nasdaq, BX and PSX will use the National Best Bid or Offer (bid for sell orders and offer for buy orders) as the LOP Reference Price to calculate the Limit Order Price Protection Threshold. If the order price exceeds the greater of 10% of the LOP Reference Price or \\$.50, the entire order will be rejected at the time of order entry. These protections will be in place for all securities across all trading sessions. The changes will offer improved customer protections and eliminate partial executions from occurring on transactions that are the result of unintended prices.

All quotes and orders will be subject to Limit Order Protection with the exception of:

  • Securities that are not trading (Halts/IPOs)
  • Orders that are directed to an opening/closing auction
  • Orders marked as ISO
  • Orders marked with a Pegging attribute (i.e. market, market maker, primary)
  • Orders in symbols where the Limit Order Protection has been suspended