SEC Approves Proposals to Reduce Volatility in Trading

http://www.bloomberg.com/news/2012-06-01/sec-approves-exchange-proposal-to-adjust-u-s-trading-curbs-1-.html

The Securities and Exchange Commission approved two proposals to alter trading curbs meant to curtail volatility in the U.S. stock market.

The regulator approved a system known as limit-up/limit- down that prevents trades at prices outside a specified band, according to a statement on the SEC website yesterday. It also backed changes to broader circuit breakers instituted after the 1987 market crash that halt exchange-listed securities in U.S. markets during periods of volatility. Both programs will be implemented on Feb. 4 for a one-year pilot period.

U.S. stock exchanges and the Financial Industry Regulatory Authority, which oversees more than 4,400 brokers, introduced curbs for individual stocks after the May 2010 rout known as the flash crash to halt shares when they rise or fall at least 10 percent in five minutes. Exchanges asked for permission 13 months ago to test the limit-up/limit-down system and updated their proposal on May 24.