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Wednesday, November 17, 2010

SEC Seen Extending Circuit Breakers

View this article on our website: SEC Seen Extending Circuit Breakers

SEC Seen Extending Circuit Breakers

The Securities and Exchange Commission is likely to extend its circuit-breaker trading pilot beyond its Dec. 10 deadline, Dow Jones Newswires reports.

The trading curbs, instituted in response to the May 6 flash crash, halt trading for five minutes once a stock moves 10% in any direction over the course of five minutes. The SEC is working on a permanent replacement for the pilot but will not be finished by Dec. 10, according to unnamed Dow Jones sources said to be involved in the discussions.

Among the possible innovations is a "limit up/limit down" model, which would limit trading within a predetermined price range for securities that trip volatility alarms, rather than shutting down trading completely, as the circuit breakers do. SEC chairwoman Mary Schapiro said in a speech last week that this model was being considered.

Adopting that system, however, would entail surveying public opinion as well as votes by the commission to propose and then approve.

By Joe Morris
To read the Dow Jones Newswires article cited in this story, click here if you have a paid subscription.

(News summaries based on original reports in other publications are prepared by the FundFire staff and are not created, sponsored, approved or endorsed by the publications to which the original reports are attributed.)

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