The Securities and Exchange Commission began an overhaul of rules adopted after the Crash of 1987 designed to shut down the stock market during periods of volatility, proposing that curbs be triggered when the Standard & Poor’s 500 Index falls 7 percent, according to the good people at Bloomberg
The changes would switch the index used for the circuit breakers to the S&P 500 from the Dow Jones Industrial Average, according to proposals submitted by U.S. equities exchanges and the Financial Industry Regulatory Authority. The duration of the halts, which also pause trading in stock futures, would be shortened, according to a summary of the proposals from the SEC.
S&P 500 declines of 7 percent, 13 percent and 20 percent from the prior day’s close would set off halts across all markets, narrowing the current thresholds of 10 percent, 20 percent and 30 percent, according to the SEC.
“This new marketwide circuit breaker together with other post-Flash Crash measures is designed to reduce extraordinary volatility in our markets,” SEC Chairman Mary Schapiro said in the statement…
Find out more at http://www.bloomberg.com/news/2011-09-27/sec-reports-propsals-to-revise-market-wide-circuit-breakers.html
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