Posted on 05/10/2010 8:41:11 PM PDT by mlocher
WASHINGTON/NEW YORK (Reuters) - Market watchdogs and six major exchanges agreed new safeguards were needed to curb trading in plunging markets, an effort to address last Thursday's mysterious market free fall.
Securities and Exchange Commission Chairman Mary Schapiro met on Monday with the leaders of major stock and option exchanges, as well as the brokerage industry watchdog, the Financial Industry Regulatory Authority (FINRA).
"As a first step, the parties agreed on a structural framework, to be refined over the next day, for strengthening circuit breakers and handling erroneous trades," Schapiro said in a statement that provided no further detail.
Regulators still have not pinpointed the exact cause of last week's 20-minute market roller coaster, when many stocks usually regarded as safe dropped precipitously for several minutes before recovering most of their losses.
One source said the general agreement on revamping market safety valves included a circuit breaker, or pause in trading, that would apply across all trading venues, if an individual stock falls sharply.
There was also agreement on updating the existing broad circuit breakers for severe market declines, said the source who requested anonymity because the talks are private.
Currently, if the market falls more than 10 percent in a day before 2 p.m. local time, a circuit breaker is triggered and shuts the market down for one hour. If the market falls more than 20 percent after 2.30 pm, the market shuts for the rest of the day.
Both the Dow Jones Industrial Average and Standard & Poor's 500 index never reached the crucial trigger point on May 6. The Dow fell as much as 9.2 percent and the S&P was off as much as 8.6 percent during the latter half of Thursday's trading day.
(Excerpt) Read more at news.fidelity.com ...
...
U.S. Treasury Secretary Timothy Geithner urged a speedy response to last week's events ...
We still don't understand the problem, but we have to rush to fix it.
Ain’t it amazing how fast that “fat finger” lie evaporated?? It turns out a junior trader simply cannot enter a “b” instead of an “m” after all.
This talk of faster circuit breakers is unsettling. If the breakers had kicked in last Thursday and shut down trading with the Dow down over 1,000 points we would still be mopping the blood out of the streets around the globe.
Exactly! The market worked, just like it always does.
Breakers keep people in the market who, for whatever reason, need to get out.
“Regulators still have not pinpointed the exact cause of last week’s 20-minute market roller coaster,”
That’s not exactly reassuring.
Probably because they're spending all of their time watching porn.
“...and there was never any market manipulation any more. The End.”
LOL
In a related story, the fox agrees to boost security of the hen house.
If the markets fall 10% a hour trading halt kicks in so the markets fell 9.2% then recovered. What’s wrong with this picture?
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