SEC proposes new market volatility curbs

Michael Watson Contributor
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The Securities and Exchange Commission has proposed strengthening “circuit breaker” rules that suspend market trading in times of extreme market volatility.

In a statement issued Thursday, the agency announced proposed rules that would reduce the market-decline percentages that trigger the breakers, and reduce the amount of time the breakers would shut down markets.

The SEC proposal would reduce the decline thresholds for a trading halt from 10, 20, and 30 percent to 7, 13, and 20 percent. The proposed rules would also shorten any resulting trading halts from 30, 60, and 120 minutes to just 15 minutes. The SEC also plans to recalculate the thresholds daily rather than quarterly.

The proposed rules continue a process the SEC started in response to the May 6, 2010 “Flash Crash” which saw the Dow Jones Industrial Average lose and then regain almost 1,000 points in a matter of minutes.

The proposed rules now enter a 21-day public comment period.