STA Provides Comment Letter To SEC On “Limit Up Limit Down” Proposal

Association applauds investor protection aspects, but asks SEC to review Committee structure

(New York, NY: June 23, 2011) Last night, The Security Traders Association (STA) filed its comment letter ( with the Securities and Exchange Commission (SEC) on the Volatility Plan Proposal put forth by the US exchanges. This plan is commonly known as “Limit up Limit down.”


The STA views the Plan as a positive step in the evolution of financial markets and is supportive of its design. Many features of the plan, such as a temporary pause when certain price parameters are met, followed by a price discovery process, and finally an eventual reopening of the security, provide investors with additional protection against sudden, unanticipated changes in the prices of securities.

However, before the Plan is implemented, the STA asks the SEC to provide clarity on certain aspects of the rule and consider some recommendations. One strongly urged recommendation would be for the SEC to review is the structure and procedures of the committee that will be responsible for monitoring and making revisions to the Plan if it is implemented.

The STA believes it is highly likely that the Plan will require additional amendments and revisions before it reaches its final form and is fulfilling its intended goal of protecting investors during volatile price action.  As it is currently designed, amendments can only be made by the participants of the Plan, who are the exchanges.

STA feels there should be a means and procedure for input from a broader segment of market participants. Therefore, STA recommends an Advisory Committee be formed.

“Having an Advisory board will improve the due process of decision making on amendments which should lessen the likelihood of unforeseen negative consequences,” said STA President and CEO, Jim Toes, “The STA looks forward to continuing its work with the SEC on this important market structure development.”