Monday Post #2: New York Stock Exchange invokes rule 48

Update (4:00 pm PDT): DOW closes -634.76; TSX closes -491.21; Gold hits new high above $1,720; Silver languishes at $39 level

Update (8:35 am PDT): DOW recovered to -200 but plunges back to -300, end of updates till after market close.

Update (7:29 am PDT): DOW down -350.00

Update (7:22 am PDT): DOW hits -300.00

Update (7:17 am PDT): DOW down -281.00

Update (7:11 am PDT): TSX down -312.48

Update (7:04 am PDT): Reuters - "Announcements should be expected this morning about effects to corporations from S&P’s downgrade of U.S. credit rating"

Update (7:00am PDT): DOW holds between -200.00 and -230.00, 99% of S&P trading lower

Update (6:35 am PDT): S&P announces further downgrades incl US. agency debt

Update (6:32am PDT): DOW down -246.00
Update (6:30 am PDT): DOW opens -109.00

If you’re interested. Here’s the Coles Notes version of "Rule 48" which the NYSE invoked to smooth the open today. Here’s the Cliffs Notes version:

• (a) In the event that extremely high market volatility is likely to have a Floor-wide impact on the ability of [Designated Market Makers] to arrange for the fair and orderly opening, reopening following a market-wide halt of trading at the Exchange, or closing of trading at the Exchange and that absent relief, the operation of the Exchange is likely to be impaired, a qualified Exchange officer may declare an extreme market volatility condition with respect to trading on or through the facilities of the Exchange.

• (b) In the event that an extreme market volatility condition is declared with respect to trading on or through the facilities of the Exchange, a qualified Exchange officer shall be empowered to temporarily suspend at the opening of trading or reopening of trading following a market-wide trading halt: (i) the need for prior Floor Official or prior NYSE Floor operations approval to open or reopen a security at the Exchange (Rules 123D(1) and 79A.30); and/or (ii) applicable requirements to make pre-opening indications in a security (Rules 15 and 123D(1)).

Dow Jones’ Kristina Peterson explained it pretty well in a story earlier this month. She writes that basically it means the designated market makers “will not have to disseminate price indications before the bell," making it easier and faster to open stocks. The rule was approved by the Securities and Exchange Commission on Dec. 6, 2007 and has been used rarely since then.”

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