Breaking News: What the SEC’s New Individual Stock Curbs Might Look Like

This isn’t cast in stone yet, but I’m told that starting Monday, a pilot program will be filed requiring all exchanges to apply new rules to S&P 500 stocks and select active ETFs, designed to prevent a rehash of Thursday May 6th’s extreme price action.
Trading in each stock will be monitored by the exchange it’s listed on.  Curbs will be triggered when there is a 10% decline (or advance) in any rolling 5 minute period between 9:45am and 3:30pm.  If the curb is triggered, the listing exchange will send out a message, and trading will be “paused” for 5 minutes, during which time no trading would occur – quoting only. Once the listing exchange prints a new trade, the pause would be lifted.  This is similar to the way that stocks come out of breaking news trading halts currently.
The plan will likely be implemented in 30 days.
EDIT:  in case it’s not clear, it seems that the goals of this plan are to 1) allow for “circuit breakers” during times of large price movement and 2) to put the onus of responsibility back on the listing exchange – under these rules, the listing exchange is the one who controls the “re-opening” of a stock.

-KD

Kid Dynamite is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. If you click on my Amazon.com links and buy anything, even something other than the product advertised, I earn a small commission, yet you don't pay any extra. Thank you for your support.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Kiddynamitesworld Blog