Background

The SEC and all of the stock exchanges in the U.S. have developed a new NMS (National Market System) plan with LULD (Limit Up/Limit Down) provisions. Once the plan is approved all U.S. exchanges will have to have the ability to limit trading in certain scenarios.

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Goal

Implement the limit up and limit down functionality prescribed by the new NMS plan.

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Solution

CTI was engaged in the full application development life cycle of LULD implementation. A few of client system needs to be modified in compliance with this SEC regulation. Client’s message system will need to accept new messages from the Session Initiation Protocol indicating upper and lower price bands for all securities that are part of the plan. The message types from SIAC will likely be different from the message types from NASDAQ.  Message system will forward those messages to client.  Client will ensure that trades do not occur below the lower price band or above the upper price band. Additionally, Client will ensure that orders or quotes to sell are not booked below the lower price band and orders or quotes to buy are not booked above the upper price band. Any orders or quotes or partial order or quote that would cause these rules to be violated will be cancelled or rejected.

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Impact

The benefit of this project is that client’s exchange will be in compliance with the new NMS plan.