NYSE Invokes Rule 48 In Anticipation Of Extreme Volatility

Tyler Durden's picture

The NYSE hedged its bets earlier by invoking the rarely used Rule 48, which "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." The full disclosure was made on the NYSE blog:

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.

And some other "do not panic, we have nothing under control" information dissemination by the NYSE:

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

 

 

Now add 17 March, 2008 to the list. I kind of had an uneasy feeling all weekend about Bear Stearns, and felt even worse upon seeing the announcement on Sunday night. To my train buddy at Bear Stearns and his colleagues, I'm sorry to see this happen.

 

And just for reference, here's a link to our circuit breakers. Here's hoping we don't need them today. Or any other day, for that matter.

 

Good luck today, everyone.

Good luck indeed. 

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BobPaulson's picture

And they're off...

Anonymous's picture

Have you ever seen an hungry algorithm drool?

Cognitive Dissonance's picture

Rule 48, the proverbial finger in the dam. Next thing you know, the short sellers will be brought out for a very public flogging.

The old tried and true Jedi mind tricks are usually the best when dealing with the hive mentality. Be quiet, the spirits are about the speak.

Daedal's picture

the short sellers will be brought out for a very public flogging.

I just got an email from TD Ameritrade the other night stating there's new, stricter, margin requirements on leveraged ETFs. Coincidence? Perhaps.

chindit13's picture

You left out, of course, that Rule 48 would only ever be invoked if the market looked to be opening lower.

And then there is the even more rarely used Rule 49 which states:

"The market is currently closed for repairs.  Come back when you are in the mood to buy."

Screwball's picture

At this point, nothing should surprise us.  If the market turned green today it wouldn't surprise me a bit.

10044's picture

And the trading fl of credit suisse is on fire (litterally) everyone evacuated. Talk about luck!!

Barry's picture

Is the Fed buying equities too?

Keyser Soze's picture

Only when it pleases Goldman.

Kurtieboy's picture

 The sale is on and it will not last long.

Ivanovich's picture

Of course the Fed is buying.  We should close green today.  Dubai?  That's on a whole other continent!

Thomas's picture

They invoked it today? This is just a blip.

10044's picture

Fed buys all sorts of s### except gold

alexdg's picture

Has assumed that it and other central banks actually short gold.

Anonymous's picture

Chit!

Boop's picture

The link ("One day only") is for March 17th, 2008. Haven't found other references to Rule 48 via Google News.

phaesed's picture

Ummm, did they announce this today? The link is from last year.... That's not cool, but who am I to judge

You Cant Handle the Truth's picture

http://www.nyse.com/audience/marketprofessionals.html

According to the system status notice, it says the rule was invoked today at 9:10am.  I can find no mention of it searching Google news.  *shrug*

rtalcott's picture

http://en.wikipedia.org/wiki/Article_48_(Weimar_Constitution)


Article 48 (Weimar Constitution) From Wikipedia, the free encyclopedia

Article 48 of the constitution[1] of the Weimar Republic of Germany (19191933) allowed the President, under certain circumstances, to take "emergency measures" (including the promulgation of legislative decrees[2]) without the prior consent of the Reichstag (German parliament).[3] Legislation promulgated under this article of the constitution was referred to asNotverordnung (emergency decree). Article 48 was used by Adolf Hitler in 1933 to establish a dictatorship, ending the Weimar Republic and ushering in the Third Reich.

rt

BobPaulson's picture

Reichstag fire at Burj Dubai?

phaesed's picture

That's a stretch, even to me, but I've seen stranger causal links.... nice find, ty

Big Red's picture

Hmm, Article 48, Rule 48. Then comes to my mind the complete absurdity of Andrew Jackson on the US $20. Are TPTB the ultimate jokester's or what?

Anonymous's picture

Don't lament... We could have Bush, or Obama, or who knows? I'll tell you what - if I am ever President, removing Andrew Jackson from our currency will be one of my priorities. Now, sleep better and don't worry about the Indians.

Anonymous's picture

Don't lament... We could have Bush, or Obama, or who knows? I'll tell you what - if I am ever President, removing Andrew Jackson from our currency will be one of my priorities. Now, sleep better and don't worry about the Indians.

Anonymous's picture

Just sit back, continue to let the turkey settle and while the wife is out shopping - The robots will make it all right once again.

Aaaahhhhhh!!! There it is.

Anonymous's picture

the markets are so obviously in a state of computer controlled farce

a sickening criminal racket

I can't believe all people aren't screaming bloody murder about this

RockyRacoon's picture

What people?  Oh, those down at Walmart and Target snapping up the Black Friday bargains?  Those people?  The people who matter are screaming -- keep reading ZH.

Anonymous's picture

There are no "people" left in the markets. It's all computers and day traders at this point. Most retail investors left after the S&P went to 1000.

mdtrader's picture

FED to announce bailout package for Dubai. 85 Broad front running??? lol!

Rusty_Shackleford's picture

Don't laugh.

"Systemic Risk" could also apply to the worldwide "system".  It certainly would classify as an emergency, would it not?

 

There is nothing in place at the moment that can stop the FED from buying/backstopping ANYTHING it wanted to.  It's balance sheet is infinite.

 

Think about it.  Won't you?

CounterParty's picture

The PET on the job. EURUSD moving on up as shiploads (or shitloads?) of dollars depart port of New York bound for distant shores to succor suffering bondholders in areas pummelled by recent storms.

Screwball's picture

Incredible, just fricken incredible.  Tells us more about this country than we really want to know.

Thanks for the link lizzy.

MinnesotaNice's picture

That says it all... what a tiny tidbit that says so much about the current state of disrepair in America!

Anonymous's picture

Too funny. I like that bestiality kiss toy sold at Walgreens. Amazing.

http://www.huffingtonpost.com/2009/11/27/15-toys-not-to-buy-your-k_n_351...

bobby02's picture

hillarious! who said the best & brightest work in finance?

MsCreant's picture

Notice the squid that comes with the second toy?

Rusty_Shackleford's picture

The PlayMobil Security Checkpoint

 

"Now with working Mini-Taser!!!"

 

"When suspect/terrorist is clubbed about the head and face and then violated with a broom-stick it let's out a blood-curdling scream.  Just like in real life!!!"

 

For ages 3 and under.

Big Red's picture

Notice the head of Safari Spiderman compared to Beach Spiderman-looks like he's already been on safari and met the Tribe of the Head-Shrinkers...

Brahms Third Racket's picture

All I've seen since the open is a frantic attempt to pump it straight back up.  I can't really say that I am surprised either. I can recall many occasions over the last few years when foreign markets sold off big (rationally) overnight  only to be followed by a "miraculous" burst of optimism once US markets opened. In fact, it was the repeated occurrence of that scenario that knocked me off the fence and convinced me that yes, the US equity market is indeed manipulated. I don't know if it will hold or not but I think the attempt was fairly predictable.

WhataMess's picture

Totally agree, the DOW is used to control the World markets, it has happened so many time I have lost count. I am UK based and wrote this on another Forum yesterday while the FTSE was suspended due to a "technical" issue.

Yesterday

Someone was suggesting the PPT would be in action

Yes DOW will be used to stabilise things tomorrow, it is a little too early for them to let the DOW correct, they need to squeeze as much out of the consumer as possible in the build up to Christmas. It is still possible they will allow a correction nearer to Christmas once the shopping is done and people have their minds on other things. The markets at these levels are comical but are the only thing backing up the propoganda they launched in March in the world MSM.

 

mdtrader's picture

Rule 49 - The EURUSD can never trade below 1.48 ever again. Even if the whole of Eastern Europe defaults.