All U.S. stocks will probably be subject to so-called circuit breakers (a mechanism that would briefly halt trading in individual stocks whose price moves by 10% over a five-minute period) by the end of this year, NYSE Euronext (NYX) Chief Executive Duncan Niederauer said Thursday.
The circuit breakers will initially apply to component stocks in the Standard & Poor’s 500 index as regulators try to avoid a repeat of the May 6 market slide that quickly spiraled out of control.
Speaking at a news conference in Shanghai, Niederauer proposed that the circuit breakers should also be expanded to some exchange-traded funds, something the SEC has said may happen “as soon as practicable.”
Reuters: “Our expectation is that they will be more aligned with the underlying liquidity of the individual securities, probably by the end of the year, which will be coincidental with some other changes the SEC is contemplating for revaluating the market structure of the United States on a more comprehensive basis,” Niederauer said.
The SEC has yet to determine exactly what caused the Dow Jones Industrial Average (^DJI) to plummet nearly 1,000 points in just 15 minutes on May 6.
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