New Limit Up/Limit Down Rules Start Today

New limit up/limit down rules will add additional complexities to the markets in an attempt to curb volatility. Let's see how they actually work.

The rollout of the new Limit Up Limit Down will commence on Monday, April 8th, 2013.

The proposed new introduction of limit-up / limit–down will try to limit extreme price movements in an already burdened market with excess directional market influences.

IMPORTANT ASPECTS TO CONSIDER:
-- The use of Limit-Up Limit-Down exacerbates trading within specific ranges in order to help facilitate decreased volatility.
-- Traders will experience these buffers before trading halts actually occur.
-- These rules have already been in effect for many years in a number of foreign markets.
-- In volatile names, quotes at the NBBO may fall outside the limit bands and therefore will not be executable.

Let’s see what this new scale of trading limits will bring to already convoluted and fragmented market here in the U.S. Michael J. Levas has been in the investment management business for over 25 years and is the founder, senior managing principal & chief investment officer at the Olympian Group of Investment Management Companies. Prior to Olympian, he was a VP and Portfolio Manager in the ... View Full Bio