US equity exchanges will begin today (Friday June 11) implementing new circuit breaker rules, designed to prevent a repeat of the May 6 ‘flash crash’.
Proposed by the national securities exchanges and the Financial Industry Regulatory Authority in the wake of the chaotic trading of that day, the rules were accepted as policy yesterday (Thursday) by the US Securities and Exchange Commission.
They will oblige all exchanges and Finra to halt trading in any stock that rises or falls more than 10% in a five minute period. The halt will last for five minutes and must be applied by all trading venues at once. Listed options on the suspended stock would also be frozen.
The circuit breakers will come into effect 15 minutes after the stockmarkets’ 9.30am opening in New York, and will be turned off for the last 25 minutes of the day, up to 4pm.
At first...