SEC Proposes New Stock-Trading 'Circuit Breaker'

Tuesday, May 18, 2010

After the near 1,000 point drop of the Dow Jones earlier this month, the Securities and Exchange Commission has announced a plan for an across-the-board "circuit breaker."

The new proposal would pause trading for all U.S. stock markets for five minutes when a specific stock rises or falls more than 10 percent in a five-minute period. While trading safeguards currently exist, regulators increasingly believe different rules at different exchanges helped cause the drop on May 6.

The uniform rules could prevent such wild market swings. The new rule is still subject to final approval and would be in effect as a pilot program until early December.

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