Rule 48 in effect again today

By: Ray Pellecchia

File Under: NYSE

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With the futures up significantly this morning, NYSE is invoking Rule 48 today, as we did yesterday. That means that mandatory opening indications are not required. Here again is the background on the rule:

Rule 48 provides the exchange with the ability to suspend the requirement to disseminate price indications and obtain floor-official approval prior to the opening when extremely high market-wide volatility could cause delay opening securities on the exchange.

Rule 48 is intended to be invoked only in those situations where the potential for extreme market volatility would likely impair floor-wide operations at the exchange by impeding the fair and orderly opening of securities. Accordingly, the rule sets forth a number of factors to be considered before declaring such a condition, including:

-- Volatility during the previous day’s trading session;
-- Trading in foreign markets before the open;
-- Substantial activity in the futures market before the open;
-- The volume of pre-opening indications of interest;
-- Evidence of pre-opening significant order imbalances across the market;
-- Government announcements;
-- News and corporate events; and,
-- Any such other market conditions that could impact floor-wide trading conditions.

So yes, even bullish market conditions can trigger the rule. The invocation of Rule 48 is in effect only for today. Previously, the NYSE invoked the rule on 11 and 17 March, 2008; 22 and 23 Jan., 2008; and 12 Dec., 2007. The rule was approved by the Securities and Exchange Commission on 6 Dec., 2007.

And please forgive my usual reminder to subscribe to our System Status Notifications via RSS.

Will post some more stuff later; wanted to put this up in a hurry.