Managing Market Outages: New Proposed Standards

Plato Partnership has announced new standards for managing cash equities market outages, developed by Plato member firms with discussions with major European exchanges including Deutsche Börse, Euronext, SIX Swiss Exchange, and Nasdaq OMX. 

While not all standards have been agreed by all exchanges, where standards have been agreed exchanges will amend their market outage policies and/or playbooks in the coming weeks.

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 close collaboration with the Financial Conduct Authority’s (FCA) working group on market outages, who are developing standards for UK trading venues, ensuring consistency across both UK and European trading venues for market participants.

The 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.

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.

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.

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.

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:

  1. Last traded price where the continuous phase has commenced;

  2. Opening price where the continuous phase has not commenced;

  3. Prior closing price where the market has not opened.

Mike Bellaro, CEO of Plato Partnership

“As someone who’s spent years on the buy-side, I know how disruptive outages can be for market participants. 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. This isn’t just about improving procedures - it’s about safeguarding the trust and integrity of the entire trading ecosystem”

Salvador Rodriguez, Sell-Side Chair of Plato Partnership and EMEA Head of Global Execution Services at Instinet Europe Limited

“The clarity these standards bring is crucial for us on the sell-side, particularly during market disruptions which can be highly detrimental for our clients. These guidelines will help ensure that we can maintain operational continuity, protect our clients' interests, and manage risks more effectively”

Nicolas Rivard, Global Head of Cash Equity and Data Services at Euronext

“At Euronext, we are committed to upholding the highest standards of market integrity and operational resilience. These proposed guidelines align with our ongoing efforts to enhance market stability and provide our clients with the assurance they need during volatile periods.”