The Plan to Address Extraordinary Market Volatility, also known as Limit Up/Limit Down (LULD), will begin its pilot period in 2013. LULD requirements are designed to prevent trades in individual securities from occurring outside of the specified Price Bands, across all US markets, while allowing the product to continue to trade. It is replacing the current system of single-stock circuit breakers that was established in 2010 https://etp.nyx.com/en/trading-information/us/arca-trading-pauses. Phase I of the one-year LULD pilot will begin on April 8th, 2013 (start date is pending SEC approval).
Here is a brief summary of how LULD will work:
For a more detailed description of Limit Up/Limit Down, please read the official SEC filing:http://www.sec.gov/rules/sro/nms/2012/34-67091.pdf
Tier 1 and Tier 2 ETPs:
In Phase I of the LULD pilot, only ‘Tier 1’ ETPs will be subject to the LULD regulations. Tier 1 ETPs are non-leveraged ETPs with a CADV over $2 million. An ETP’s primary listing exchange will determine whether or not the product meets this CADV threshold on a semi-annual basis, and will adjust the list of Tier 1 ETPs accordingly. According to these inclusion factors, approximately 407 ETPs would be eligible for Tier 1. The percentage parameters for Tier 1 ETPs (as well as Tier 1 NMS Stocks) will be determined using their previous closing price, in accordance with the table below:
*This diagram is an example of the upper and lower limits of a tier I ETP, with a 5% percentage parameter.
Phase II of the LULD implementation will begin on August 1, 2013 (date subject to SEC approval). Phase II will expand LULD to include Tier 2 ETPs, which are all remaining ETPs not in Tier 1. The percentage parameter for Tier 2 ETPs will be based on the previous closing price and will follow the table below:
Market Wide Circuit Breakers:
Market Wide Circuit Breakers (MWCB) will be implemented on April 8th, 2013 (date pending SEC approval). Under the current criteria, there would be a market halt of 30 minutes, should the Dow Jones Industrial Average change by approximately 1300 points. Under the new criteria, a 15 minute halt will be instituted should the S&P 500 change by more than 100 points (approximately). Here is the summary of changes to the MWCB from Colin Clark’s blog “Updating the Market-Wide Circuit Breaker”.
 This summary is designed to give a basic overview of Limit Up/Limit Down and excludes many additional details including how LULD will work under various different trading situations. For a full explanation of LULD, please read the recommended links imbedded in the blog.
 As of December 1, 2012.