NYSE invokes Rule 48 for market open in anticipation of volatility

The rule has been used only a few times in recent history, including during the global recession in January 2008 and in May 2010. This followed a dramatic drop in pre-market open futures, with the Dow Jones Industrial Average futures falling more than 700 points.

Just what is Rule 48?

The New York Stock Exchange invoked a special rule today in an effort to smooth volatility and trading at the market open, reports Reuters.

It is intended to be invoked only when the potential for extreme market volatility could have a floor-wide impact, according to NYSE. It speeds up the opening by suspending a requirement that stock prices be approved by stock market floor managers before trading starts. They step in to both buy and sell stocks when other trading partners can’t be found.

The goal of Rule 48 is to ensure orderly trading amid financial market turbulence.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.