SEC Proposes Circuit Breakers

In reaction to the rollercoaster ride the market took on May 6, when the Dow fell 1,000 points in less than an hour, the SEC is proposing a trial run for “circuit breakers,” which would pause trading on any stock if the price on it moves by more than 10 percent in a five-minute period. SEC Chairwoman Mary L. Schapiro said, “I believe circuit breakers for individual securities across the exchanges would help to limit significant volatility.” The agency is investigating the May 6 event in hopes of setting a fair process for judging trades and setting up standards to apply in anticipation of another similar incident. The agency is also working to put an audit trail in place, to better analyze market transactions.