Description and Responsibilities
NASDAQ MarketWatch provides real-time surveillance for activity on the NASDAQ Stock Market, NASDAQ OMX BX, NASDAQ OMX PSX and the NASDAQ Options Market to maintain an orderly marketplace and level playing field for investors, market participants and listed companies. In an effort to foster marketplace integrity, MarketWatch oversees the complete and timely disclosure of material information by NASDAQ-listed companies. In addition, MarketWatch monitors compliance with Exchange rules and policies through real-time surveillance of price and volume information reported by market participants in both equities and options transactions. MarketWatch works closely with NASDAQ business lines and FINRA in an effort to provide fair and equitable regulation for the NASDAQ markets. When activity is suspected of being potentially in violation of Exchange rules and policies, MarketWatch refers the activity to FINRA's Market Regulation for further review and potential disciplinary action. Information received by MarketWatch is confidential and used strictly for regulatory purposes. MarketWatch implements fair and independent decisions within the scope of its authority and without influence from other NASDAQ offices.
NASDAQ Stock Market Rules require that, except in unusual circumstances, companies make prompt disclosure to the public through any Regulation FD-compliant method (or combination of methods) of disclosure of any material information that would reasonably be expected to affect the value of its securities or influence investors' decisions. Companies are required to notify MarketWatch at least ten minutes prior to the public release of certain material news announcements when the public release of the information is made during NASDAQ market hours (7:00 a.m. to 8:00 p.m. ET). If the public release of the material information is made outside of NASDAQ market hours, companies must notify MarketWatch of the material information prior to 6:50 a.m. Eastern Time. This notification must be provided to MarketWatch through the Electronic Disclosure submission system accessible at www.nasdaq.net. MarketWatch does not accept material news disclosures by fax or phone, except in emergency situations. MarketWatch business hours are from 6:30 a.m. to 8:00 p.m. Eastern Time, Monday through Friday. NASDAQ MarketWatch assesses company disclosures for materiality and in certain circumstances, may implement a temporary trading halt to allow for even dissemination of the information. A trading halt provides the public with an opportunity to evaluate material information and consider it in making investment decisions.
MarketWatch monitors real time trading in all NASDAQ securities during the trading day for price and volume activity utilizing automated surveillance systems. In the event of certain price and volume movements without a reasonable explanation, MarketWatch may contact a company in order to review the unusual market activity. MarketWatch treats the information provided by the company and other sources in a highly confidential manner, and uses it to assess market activity and assist in maintaining fair and orderly markets. A NASDAQ listing includes an obligation to disclose to MarketWatch information that the company is not otherwise disclosing to the investing public or the financial community.
MarketWatch makes reasonable efforts to conduct timely reviews of material news notifications, reach appropriate determinations regarding the materiality of the announcement, monitor newswires for material news affecting NASDAQ companies and, when appropriate, implement temporary trading halts prior to the public dissemination of the material news. The consideration of temporary trading halts occurs during regular market hours as well as during pre-market and after-hours trading sessions. Generally, a trading halt may not be necessary when coverage of a material news announcement is fully disseminated prior to 7:00 a.m. or after 8:00 p.m., Eastern Time. A temporary trading halt benefits existing and potential shareholders by ensuring that material news is distributed equally among all market participants and by ensuring that all trading is based on publicly held facts. Trading is normally resumed in a stock about thirty minutes following the dissemination of the material announcement through the news media or another Regulation FD-compliant manner, although NASDAQ may vary the length of the trading halt in consultation with the company, or when NASDAQ is scheduling trading resumptions around the open or close of regular market hours. NASDAQ usually reaches out to the company before making a halt determination.
MarketWatch may need to ask questions and review the news content in more depth with the company. This is especially common when reviewing disclosures related to clinical trials, FDA-related issues, developments regarding customers or suppliers and legal or regulatory developments. If MarketWatch is unable to reach a company official to review the materiality of the announcement before the news is made public, it is possible that a halt may not be implemented prior to dissemination because an evaluation with the company could not be completed. Prior to implementing a trading halt, MarketWatch will verify the news with a company official to ensure the security of the disclosure information. The staff will call the corporate official at the company's main number or will call the corporate official directly at the phone number on file with NASDAQ in order to complete this verification. If MarketWatch is unable to verify the information with the company before the release of the material news announcement, MarketWatch may halt trading once the news disclosure is made public, (e.g. if the news disclosure is a press release, the trading halt will be implemented once the news crosses the newswires). In cases where MarketWatch does not receive prior notification of material news (for example, a company does not submit the prior notification), or is unaware material news is being made public (such as might occur in the case of an unsolicited tender offer), MarketWatch monitors the newswires and may have to make an assessment once the news is public whether any further steps are appropriate. There may be situations where, due to the passage of time, NASDAQ determines that a trading halt would not be in the best interests of the market. In general, any trades that occur during the period after news dissemination but before implementation of the trading halt, or that occur if no halt is implemented, will stand unless these trades result from a trading error that meets the requirements of NASDAQ Rule 11890.
NASDAQ also follows regulatory halts implemented in non-NASDAQ-listed securities by the listing exchange. MarketWatch is informed of these regulatory halts by data feed or other notification by the listing exchange. MarketWatch attempts to implement these halts as rapidly as possible after notification, but timing is affected by factors similar to those outlined above, including delays in notification by the listing exchange. NASDAQ will determine the status of trades that occur prior to NASDAQ implementing a halt in non-NASDAQ-listed securities on a case by case basis after consultation with other affected markets.
(This Trading Halt description is for informational purposes only. NASDAQ reserves the right to take any and all actions, at any time, to halt or resume trading in securities trading in any of its systems.)
Market Wide Single Stock Circuit Breakers
In conjunction with all U.S. equity exchanges, rules are in place for The NASDAQ Stock Market, NASDAQ OMX BX and NASDAQ OMX PSX for single stock circuit breakers or trading pauses for individual stocks in the S&P 500 Index, the Russell 1000 Index and certain Exchange Traded Products that experience a price change of 10% or more during a rolling five-minute period. Under these rules, if any covered security experiences a price change of 10% or more during a five-minute period, a five-minute trading pause initiated by the primary listing market for the security will commence and will be followed by all other markets. Effective August 8, 2011, the Single Stock Circuit Breaker functionality was expanded to include all other Reg NMS securities not previously included in the pilot. For these additional Reg NMS securities, the price movement in a rolling five-minute period that will trigger a trading pause is 30% or more for securities priced at $1 or higher and 50% or more for securities priced at less than $1. Effective November 25, 2011, all rights and warrants were excluded from the Single Stock Circuit Breaker functionality. Securities subject to a single stock circuit breaker will also be re-opened by the primary listing market. The Single Stock Trading Pause functionality is in effect between 9:45 a.m. ET, and 3:35 p.m. ET. No single stock trading pause is called outside of these times. Please note, while NASDAQ does not implement a market pause after 3:35 p.m. ET, a trading pause can remain in effect as late as 3:45 p.m. ET. These market-wide rules were initially approved for a pilot period of six months, commencing June 14, 2010. The pilot period for all stocks, except rights and warrants, now extends until February 4, 2013.
NASDAQ MarketWatch monitors trading compliance in the NASDAQ Stock Market, NASDAQ OMX BX and NASDAQ OMX PSX for equities and the NASDAQ Options Market. It is the MarketWatch analysts' responsibility to protect marketplace integrity by reviewing alerts generated by real-time automated detection systems. MarketWatch immediately resolves any trade reporting issues relating to the accuracy of price and volume information reported by market participants trading and quoting NASDAQ or exchange-listed securities in NASDAQ Systems. MarketWatch performs several regulatory functions related to Reg NMS Compliance including Trade Through, Locked and Crossed markets and Self Help compliance. MarketWatch actively monitors IPOs during the opening quote process to facilitate an orderly open and may extend the quote window if required. The trade adjudication process for NASDAQ equity and option transactions is administered by MarketWatch. This includes coordination with other markets when larger trading issues affect multiple market centers.
NASDAQ MarketWatch recognizes the need to have technical expertise on staff to assist with maintaining regulatory compliance when changes are made to NASDAQ trading systems, rule book, data feeds, and surveillance applications. The Regulatory Technology team is responsible for ensuring that both business and technical changes are in compliance with the NASDAQ rule book. This team is the liaison to other business units within NASDAQ as well as external regulatory groups.
MarketWatch Market Regulation
NASDAQ MarketWatch is responsible for overseeing the efficiency and effectiveness of FINRA regulatory programs undertaken by FINRA Market Regulation on behalf of the NASDAQ Stock Market, NASDAQ OMX BX, NASDAQ OMX PSX and the NASDAQ Options Market. MarketWatch's primary task is to coordinate the services that NASDAQ purchases from FINRA Market Regulation. In this role, MarketWatch develops reporting standards for FINRA Market Regulation, manages the budget for allocated FINRA regulatory services, and reviews the activities of FINRA Market Regulation for consistency with NASDAQ's self-regulatory responsibilities. MarketWatch assists the Chief Regulatory Officers of NASDAQ's exchanges and works closely with NASDAQ's Information Technology business line and the Office of General Counsel to facilitate day-to-day information sharing between NASDAQ and FINRA.
NASDAQ MarketWatch Duties
NASDAQ MarketWatch Duties include:
- Review material news disclosures
- Trading Halt administration
- Review of unusual market activity
- Review of market participant trading activity
- Trade Break Adjudication
- Clearly Erroneous for Equities and Portal trades
- Obvious Error for Option trades
- Reg NMS compliance
- Initial Public Offering (IPO) release process
- Excused Withdrawals and Reg M activity
- Market participant quoting obligations administration
- Refer potential violations to FINRA
- Oversight of FINRA regulation programs for NASDAQ
- What is the contact information for MarketWatch?
- What are considered "Reg FD compliant" methods of disclosure for addressing NASDAQ's disclosure rules?
- Are Forms 10-Q and 10-K filings considered Reg FD compliant?
- Does MarketWatch approve news disclosures?
- If a NASDAQ company is primarily releasing material news in a webcast or conference call, does the company still have to provide appropriate notice to MarketWatch?
- Does MarketWatch halt trading for every piece of material news?
- Is a NASDAQ company obligated to answer a MarketWatch analyst's question over the phone?
- What happens if a NASDAQ member executes a trade during a trading halt?
- How long is the duration of a trading halt?
- Where can I find trading halt information?
- How do I submit an equity trade Clearly Erroneous filing to MarketWatch?
- How do I submit an options trade Obvious Error filing to MarketWatch?