Nasdaq Adds Price Protections for Stock Trading Halts
Published Date: 2/10/2025
Notice
Summary
Nasdaq is updating its trading rules to add new price protections when stocks resume trading after a halt, making sure prices stay fair and reasonable. They’re also introducing a new Hybrid Closing Cross to improve how stocks close each day. These changes affect traders and investors by helping prevent big price mistakes and will start soon after approval, keeping markets smoother and safer.
Analyzed Economic Effects
9 provisions identified: 6 benefits, 1 costs, 2 mixed.
New Halt Cross Price Protections
When Nasdaq reopens a halted stock, it will use built-in price collars around an Auction Reference Price and 5-minute display-only periods to prevent clearly erroneous executions. Initial collars are set at 10% above and below the Auction Reference Price, and if the calculated price falls outside the collars the Exchange widens collars and starts another 5-minute display-only period until the stock can reopen.
Minimum Dollar Collars for Low‑Price Stocks
For halt reopenings Nasdaq will calculate collars differently by price: for securities with an Auction Reference Price greater than $1 the collar uses $1 or 10% (whichever is greater); for securities with an Auction Reference Price of $1 or less the collar uses $0.50 or 10% (whichever is greater).
Structured Collar Widening Schedule
If a halted security's calculated reopening price remains outside collars, Nasdaq will extend the display-only process: initial collars are ±10% around the reference price; after a first extension collars are widened by another 10%; if still outside, collars widen by 20% for a third 5-minute period and then continue widening by 20% every five minutes until reopening.
Auction Reference Price Defined
Nasdaq will set the Auction Reference Price as the Nasdaq last sale price (round or odd lot) or, if none, the prior trading day's Nasdaq Official Closing Price (NOCP). In rare cases with no last sale or NOCP, Nasdaq's MarketWatch may set the Auction Reference Price.
Hybrid Closing Cross for Late Halts
If a trading halt exists at or after 3:50 p.m. and before 4:00 p.m. (Eastern Time) and the display-only period has begun, Nasdaq will use a new Hybrid Closing Cross to determine the closing price at 4:00 p.m. If there is insufficient interest to execute a Hybrid Closing Cross, Nasdaq will use the last Nasdaq sale as the NOCP for the day and commence After Hours Trading.
Hybrid Cross Threshold Prices and Tiebreakers
The Hybrid Closing Cross will have Threshold Prices derived from the last disseminated Auction Collars and an added $1/$0.50 or a percentage of the Auction Reference Price (whichever is greater). The Hybrid Cross will pick the price within those Thresholds that maximizes executed shares, then minimizes imbalance, and uses the Auction Reference Price as a fallback.
Auction Data Dissemination Limited to Nasdaq Feed
Nasdaq will disseminate Auction Reference Prices and Auction Collars on its proprietary feed Nasdaq TotalView-ITCH and, consistent with current practice for non-LULD halts, will not send auction information (price collars and number of extensions) to the securities information processor (SIP).
IOC and LOC Order Execution Clarifications
Nasdaq clarifies that Immediate-or-Cancel (IOC) orders for a halted security entered prior to the Nasdaq Closing Cross will either execute in the Nasdaq Closing Cross (including the Hybrid or LULD Closing Cross) or be cancelled immediately after the Nasdaq Closing Cross. Nasdaq also clarifies the LOC order timing language around the NOII after 3:55 p.m. and prior to 3:58 p.m.
Displayed Orders Prioritized in Closing Cross
Nasdaq will change execution priority for orders participating in the LULD Closing Cross to price/display/time (displayed orders executed ahead of non-displayed orders) instead of price/time priority.
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