Plato Partnership, the organization dedicated to advancing the equities marketplace via collaboration, announces standards for managing cash equities market outages, developed by Plato member firms with discussions with exchanges including Deutsche Börse, Euronext, SIX Swiss Exchange, and Nasdaq OMX.
Although not all standards have been agreed, where standards have been agreed exchanges will amend their market “outage policies” and/or playbooks in the weeks ahead.
The standards, developed by a Plato working group of buy- and sell-side market participants, aim to enhance the “resilience, consistency and transparency” of market operations during outages.
They were developed in collaboration with the Financial Conduct Authority’s (FCA) working group on market outages, who are developing standards for UK trading venues, ensuring consistency across UK and European trading venues.
Five Proposed Standards:
- Communication of Order and Trade Status: Trading venues must communicate order and trade status to members within 30 minutes of an outage. The communication will include an outage timestamp marking orders placed, and trades executed, before the outage timestamp as valid while those placed after will be void and cancelled upon service restoration.
- Order Book Purge: As a general principle, all orders in the order book at the time of an outage will be purged prior to market re-opening, without exceptions for different order types. It is important to note that some Exchanges may decide depending on the order integrity not to perform a global purge.
- Market Re-opening Protocols: A standard 15-minute notification period to re-open will be provided to market participants and an additional 15-minute pre-open period will be applied for insertion, amendments & cancellations.
- Determination of Closing Prices: All trading venues in an outage must apply a standard cut-off time to declare the closing price of 17:00 UK / 18:00 CET. In the event an outage prevents a closing auction taking place prior to the cut-off time, the determination of the official closing price should be applied in the following order by the trading venue: Last traded price where the continuous phase has commenced; Opening price where the continuous phase has not commenced; Prior closing price where the market has not opened.
- Enhanced Trading Venue Communications: Trading venues must maintain resilient communication channels, including providing status updates every 15 – 30 minutes during an outage, even if there are no new updates.
Nicolas Rivard, Global Head of Cash Equity and Data Services at Euronext said that at Euronext, they are committed to “upholding the highest standards of market integrity and operational resilience.”
They also noted that these proposed guidelines “align with their ongoing efforts to enhance market stability and provide their clients with the assurance they need during volatile periods.”
Mike Bellaro, CEO of Plato Partnership, said that as someone who’s spent years on the buy-side, he knows how “disruptive outages can be for market participants.”
Mike added that these new standards go a long way in “providing the clarity and consistency we need. By working closely with Europe’s leading exchanges, we’re making a tangible step toward ensuring markets can function smoothly despite unexpected challenges.”
They further noted that this isn’t just about “improving procedures – it’s about safeguarding the trust and integrity of the entire trading ecosystem.”
This collective step forward will elevate the standards for transparency and effectiveness, setting a benchmark for best practices “in response to market outages across the region.”
