FINRA Adopts Amendments to Clarify Trading Restrictions Following a Trading Pause or Regulatory Halt (FINRA Reg. Notice 16-26)

FINRA adopted amendments to Rule 6121.01 to clarify the operation of the Regulation NMS Plan to Address Extraordinary Volatility (the "LULD Plan") following a trading pause or regulatory halt in a security subject to the LULD Plan.

According to FINRA, the amendments are "intended to help ensure that trades do not occur outside of the [price] bands prescribed by the LULD Plan by requiring firms to take measures to ensure [price] bands are in place (either by waiting for the receipt of the price bands from the [securities information] processor or calculating an interim upper price band and lower price band and ensuring that trades occur within those bands)." FINRA cautioned that a firm may not rely on interim price bands beyond the short period of time (generally up to three milliseconds) between the resumption of trading and the receipt of price bands by market participants.

The amendment is effective on August 22, 2016.