Nasdaq Texas expands clearly erroneous trade rules to overnight hours
The amendment to Equity 11 Rule 11890, filed Sep. 25, 2026, applies to trades executed during Overnight Protected Hours effective immediately.
Nasdaq Texas, LLC filed a proposed rule change on September 25, 2026 (Release No. 34-106632; File No. SR-NasdaqTX-2026-047) to amend Equity 11, Rule 11890, which governs Clearly Erroneous Transactions (CEE). The amendment extends the rule's existing restriction - preventing CEE review when a transaction occurs within LULD Price Bands - to the newly approved Overnight Protected Hours, thereby covering trades executed from 9:00 p.m. to 4:00 a.m. ET.
The change follows the SEC's August 5, 2026 approval of Overnight Protected Bands under the Limit Up-Limit Down (LULD) Plan for 23/5 trading. Nasdaq Texas argues that aligning CEE review with the overnight band protections will reduce discordance between the LULD mechanism and the CEE process and provide market participants greater certainty that trades executed within those bands will stand.
The proposal adds definitions for "LULD Protected Hours," encompassing both Market Hours and Overnight Protected Hours, and clarifies "Overnight Price Bands" as the bands applicable during the overnight session. Rule 11890(a)(2)(C)(1) would replace the phrase "Market Hours" with "LULD Protected Hours," and the amendment would incorporate the "Overnight Percentage Parameter" into the existing percentage-parameter test for CEE eligibility.
Additional language changes would be made throughout the rule, substituting references to "eligible for review pursuant to paragraph (c)(1)(i)" with "during LULD Protected Hours in NMS Stocks not subject to the LULD Plan." This revision would extend the same numerical-guideline treatment currently applied to pre-market and post-market trades to overnight trades in NMS stocks not covered by the LULD Plan.
The notice, published in the Federal Register on October 7, 2026 (FR Doc No. 2026-20807, Vol. 91, No. 196, pp. 64996-64998), solicits comments from interested persons. The proposed amendment is effective immediately upon filing, pending any further SEC action.
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