Alert October 04, 2011

SEC to Seek Public Comment on Proposed Changes by SROs to Market Circuit Breakers

The SEC announced that the national securities exchanges and FINRA have filed proposals to revise their market-wide circuit breaker programs which pause trading on a market-wide basis when the volatility of a reference index exceeds specified thresholds.  (The NYSE proposal is available here.)  In simple terms, the proposals would (a) reduce the percentage by which the market must decline to trigger a circuit breaker, (b) shorten the duration of trading halts when a circuit breaker is triggered, (c) reduce the number of relevant trigger time periods, (d) substitute the S&P 500 Index for the Dow Jones Industrial Average as the reference index and (e) recalculate trigger thresholds daily rather than quarterly.  The proposals are subject to SEC approval following a public comment period that ends October 25, 2011.