Series 7: 17.6.3.1.1. Trading Pauses On A Security

Taken from our Series 7 Online Guide

17.6.3.1.1. Trading Pauses on a Security

The Limit Up/Limit Down (LULD) plan was created by FINRA and the exchanges to trigger certain precautions when the bids and offers on any NMS stock move sharply and suddenly. The LULD rules define a price range for each stock. The term price band is used to refer both to the price range itself, as well as the prices at its high end (called the upper price band) and low end (called the lower price band).

The price band is a certain percentage above and below the stock’s average price over the previous five minutes. The percentage is most commonly set at 5% or 10% but can go as high as 40% based on the time of day, the type of stock, and the stock’s closing price from the previous day.

Bids above the upper price band and

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