SEC proposes stock-by-stock circuit breaker rule

20 May 2010

The SEC proposed a trial of a system intended to prevent the disruptions experienced on May 6. Trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes.

The U.S. SEC proposed a trial of a system intended to prevent from disruptions experienced May 6. Trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes.

 

Initially, these new rules would be in effect on a pilot basis through Dec. 10, 2010.

 

SEC Chairwoman Mary Shapiro said a system of individual circuit breakers on all stocks in the Standard & Poor's 500-stock index "would help to limit significant volatility," The New York Times reported. Schapiro told lawmakers on Capitol Hill May 11 regulators were working on establishing a fair process for evaluating trade

 

In her testimony before the House on May 11th, Shapiro already announced that the Commission is considering a number of proposals that will address key issues raised on May 6.

 

In a preliminary report issued on May 18th, the SEC and the Commodity Futures Trading Commission said investigators had been unable to identify a single factor responsible for the May 6 disruption.

 

Proposal press release

CFTC / SEC preliminary findings of May 6 events

Shapiro testimony

© SEC