SEC, Exchanges Want Tighter Trading Halts to Avoid Another Crash

Tuesday, 18 May 2010 07:11 AM

U.S. regulators and exchanges want market-wide circuit breakers that would temporarily stop trading when it falls five percent, two sources familiar with the talks said on Monday.

The Securities and Exchange Commission and major exchanges, responding to the severe stock market plunge on May 6, could detail the changes in the nest few days.

There are already broad circuit breakers in place, but those were not tripped in the plunge.

The proposal being considered would halt trading for various time frames when the broader market falls 5 percent, 10 percent and 20 percent, said the sources, meaning the adjustment would closely mirror a proposal by exchange operator Nasdaq.

The sources did not want to be named because the talks are private.

The SEC is also looking at other thresholds that would slow or stop trading for a period, although those details were unclear, one source said.

New breakers based on individual stock movements are also expected.

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