May

10

a rogue waveThe futures markets have limits on how far a market can move in one day (both up and down). Why not the same for stocks? You could make it % based from the previous day's close (say 10%-20%). You could hold the limit for the day, or perhaps a set period of time intra-day. Enough for participants to review outstanding orders, margin situations, and so on. It might mess with day-trading and automated trading algorithms somewhat, but it would certainly prevent the type of liquidity-related rogue moves we saw last Thursday. Showing the stacked up bids or offers at the limit price would also provide useful information for traders on how to offset the impending damage in other stocks/markets. Options would have to be subject to the same controls. These policies would have to be implemented on all interconnected markets so order flows are not unknowingly routed to the most illiquid by trading platforms.

Thoughts?


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