I was reading Jack Stevison’s blog tonight and found out that the NYSE is doing away with program trading collars or “curbs” in the jargon that CNBC uses and FBN tries to explain every few seconds. I guess now that the 20-year anniversary for the reason the collars were implemented has come and gone, the NYSE feels it is safe to get rid of them.   You can count on the real reason for ending this rule has to do with the NYSE making more revenues so please don’t buy into any stories about how this is going to help investors.  I know that the program trading collars were easily circumvented and therefore getting rid of them may be a non-event so I won’t complain too much (yet.)

However, I always enjoy hearing of mysterious changes to trading regulation like this. Remember when the SEC eliminated the “uptick rule” against short selling when a stock is falling? We didn’t hear a complaint until the first market decline and then suddenly permabulls were blaming it for taking their record highs away. Which of course was bullshit but if it gets repeated enough, it gets mistaken as truth. So now that it’s time to uncurb your enthusiasm, you can count on the next decline that exceeds 190 points on the NYSE index will bring out the bitching from the bulls. On the other hand, if we get a 190 point increase on the NYSE index, the bulls will be cheering that the collars are not slowing down the momentum they earned. Funny how it works that way.

The market is extremely volatile. Program trading makes it more volatile. Getting rid of the collars will probably increase the extreme moves on the days they occur but I suspect that it will not be a big change over what we have now. Besides, if there is a big decline you can always count on the rumor of Fed intervention to serve as a more effective tool to halt declines!