Nasdaq's Pilot Program Launches May 16

Attempting to limit the volatility of stocks, Nasdaq will launch a six-month pilot program on May 16 to address the problem.

The SEC-approved program, “Volatility Guard,” will affect 100 Nasdaq-listed stocks and will expire on September 11. The program plans to avoid sharp swings in stock prices by halting trading of a stock when it shows the beginning signs of a sharp change. When a stock price changes by a certain percentage compared to trading in the previous 30 seconds, trading will be paused. According to Nasdaq, “Trading will be halted for 60 seconds by a 15% movement in the price of securities of $1.75 or less, a 10% swing in those between $1.75 and up to $25, a 5% move in securities between $25 and up to $50 and a 3% move in those over $50. During the 60-second halt, Nasdaq will continue to accept quotes and orders.”

New market-wide regulations are being investigated, so it is very possible that this program may not be permanently put into action.