Notice to Members 99-11

NASD Regulation Issues Guidance Regarding Stock Volatility

In recent months, there has been a sharp increase in price volatility and volume in many stocks, particularly of companies that sell products or services via the Internet (Internet issuers). NASD Regulation, Inc. (NASD RegulationSM) is issuing this Notice to Members to suggest disclosures that firms can make to retail customers to educate them about the risks of price and volume volatility. This Notice also describes steps taken by some on-line brokers to respond to volatility. A companion Notice to Members issued today, Notice to Members 99-12, provides members with guidance concerning the operation of their order execution systems and procedures during extreme market conditions.

Questions or comments concerning this Notice may be directed to Mary Revell, Associate General Counsel, Office of General Counsel, NASD Regulation, at (202) 728-8203.