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NYSE asks SEC to let it flag 'aberrant' trading in ETFs

[NEW YORK] The New York Stock Exchange has asked US federal regulators to let it flag "aberrant" pricing of exchange-traded funds, according to a filing on Thursday.

The exchange asked regulators for permission to discourage traders from relying on prices "that the exchange determines to be inconsistent with the prevailing market," according to a Securities and Exchange Commission filing Thursday.

That filing was based on an Oct 28 request by the NYSE, a primary listing and trading venue for the US$3 trillion global ETF market, the commission said.

This would be the first major new rule be adopted by exchanges and regulators since hundreds of ETFs sank an average of 30 per cent from their prior-day close during a lopsided trading session on Aug 24.

On that day, ETFs, which are baskets of stocks, bonds or other securities, traded at deep discounts to the market prices of their underlying holdings. The exchange said the nature of exchange-traded products mean they need a "different, and generally broader, set of circumstances to determine that trades are 'aberrant,'" the commission said.