Alert September 21, 2010

SEC Approves Rules Expanding Stock-by-Stock Circuit Breakers and Clarifying the Process for Reviewing Clearly Erroneous Trades

The SEC announced that it has approved rule proposals submitted by the national securities exchanges and FINRA that expand a recently-adopted circuit breaker program (discussed in the June 15, 2010 Alert) to include all stocks in the Russell 1000 Index and certain exchange-traded funds.  The SEC anticipates that the national securities exchanges and FINRA will begin implementing the expanded circuit breaker program this week.  The SEC also approved new rules proposed by the stock exchanges and FINRA designed to clarify the process for reviewing trades in exchange-traded securities to determine whether they are clearly erroneous and should be cancelled (as discussed in the June 22, 2010 Alert).   As with the circuit breaker program, the final erroneous trade rules will be in effect on a pilot basis through December 10, 2010.