Skip to comments.U.S. market curbs will start as early as mid-June
Posted on 05/18/2010 11:08:03 AM PDT by RC one
U.S. market curbs will start as early as mid-June REUTERS 25 MINUTES AGO By Svea Herbst-Bayliss and Jonathan Spicer
BOSTON/NEW YORK (Reuters) - New rules to curb stock trading when markets plunge uncontrollably will kick in as early as mid-June for the largest U.S. stocks, two sources familiar with regulators' plans said on Tuesday.
The plan was hastily crafted by the Securities and Exchange Commission and the major U.S. exchanges in response to the unexplained "flash crash" on May 6 that drove the Dow Jones industrial average down some 600 points within minutes.
Regulators are still trying to pinpoint the cause of the market freefall and have been under intense pressure to find ways to uphold the integrity of the U.S. markets.
A circuit breaker or a mechanism to halt trading across markets and in a single stock has emerged as one of the key solutions to better protect investors.
The breakers will act as "speed bumps to help the market adjust quickly to the high levels of volatility," SEC Chairman Mary Schapiro said by video link from Washington at a conference in Boston.
The SEC and exchanges will propose later on Tuesday a circuit breaker that would halt trading in a company's stock if it fell more than 10 percent in 5 minutes, multiple sources have said. It was not clear how long the trading halt would last.
The circuit breakers need to be in place and operational by June 14, one of the sources said on Tuesday. The same source said the breakers would apply between 9:45 a.m. and 3:35 p.m. EST, ending in time for the New York Stock Exchange's closing auction. The trial period will last six months.
Regulators are also mulling circuit breakers that would halt trading across all markets, giving investors time to digest any news and adjust trading strategies. There are already broad index-based breakers in place, but those were not tripped when the market shot down and then recouped some of its losses in less than 20 minutes that afternoon.
Regulators have not yet pinpointed what caused the plunge, which rattled investors around the world.
Breakers that would temporarily stop trading when the broader market falls 5 percent are being considered, people familiar with the talks told Reuters. That is tighter than the minimum 10 percent threshold already in place.
Later on Tuesday, the SEC and the Commodity Futures Trading Commission are due to disclose their preliminary findings on the meltdown.
(Reporting by Svea Herbst-Bayliss, Jonathan Spicer and Rachelle Younglai; editing by Gerald E. McCormick, John Wallace and Matthew Lewis)
Sounds like they are expecting a freefall.
It does sound like someone(s) doesn’t have a lot of confidence in the long term outlook of the US stock market.
I think much of this was just a lie.
Over the summer, I expect the goverment to lie in the opposite direction. It's the apocalypse! Our economy is ruined. We're all doomed!
Then Congress will grant emergency powers to Obama.
That Fall election you were pinning your hopes on? Well ... funny thing about that ...
They should grow a set and get rid of the various ECN’s out there and force all trades back onto public exchanges, where everyone can see them. Get rid of dark pools.
Just make one central public exchange where everyone can see all trades as they’re executed, where everyone can see the depth.
And, I’d also want to see artificial volume banned - ie, get rid of the HFT’s, who are nothing but parasites now. The HFT’s claimed they were providing liquidity, but then the crap hit the fan, they fled and took their “liquidity” with them. If they’re not going to offer liquidity when the crap hits the fan, but only when it suits them, then they’re parasites. Get rid of them and let the true nature of the market shine through — which will be that we’ve seen very low organic volumes for over a year now.
The long term for America is not good yet the sheep support Obama watching TV as the 5 TV networks support Obama and control 90+% of all the channels. Stupid serfs. Keep watching.
yep, the NY stock casino is rigged by the bankers.
It’s so crazy it just might work.
Think of this: This plan was hastily crafted by the SEC.
(That says a mouthfull)
The regulators still are trying to figure out what caused the flash crash. (So they are coming up with a solution to a problem that they still don’t understand)
Boy this ought to fix the problem. More artificial controls on the market. Just kicks the can down the road again. Seems like they want to artificially stabilize the market leading up to November. After November, who knows.
>Sounds like they are expecting a freefall.
When the govt steps in and controls gaming in Vegas so no one can lose money, I’m going!
What about curbs to the upside, haven’t heard anything about that.
They should just pass a law that the stock market cannot go down and get it over with.
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