New circuit breaker for S&P single stocks: source

By Jonathan Spicer

NEW YORK (BestGrowthStock) – U.S. exchanges are considering a new circuit breaker for stocks listed on the Standard & Poor’s 500 index (.SPX: ) that would trip when an individual security moves more than 10 percent in a 5-minute rolling period, a person familiar with the discussions said on Tuesday.

The U.S. Securities and Exchange Commission, still searching for a cause of last week’s sharp market plunge, has asked exchanges to consider revising or adding new circuit breakers that would curb such trading in the future.

The source requested anonymity because the talks are ongoing.

SEC Chairman Mary Schapiro told a congressional hearing on Tuesday that the regulator has evaluated European examples of “single-stock” circuit breakers, which do not exist for the broader U.S. marketplace. She added in prepared remarks, “we also must consider the various types of time out mechanisms that can be applied to individual stocks.”

Regulators and exchanges are promoting the curbs despite no clear articulation of what exactly caused the Dow Jones Industrial Average to drop and then recover some 700 points in 10 minutes of whip-saw trading Thursday afternoon.

While circuit breakers exist for broader market drops, those were not breached on Thursday. Sources said earlier Tuesday that new circuit breakers to halt precipitous drops in individual stocks is “a done deal.”

Exchange executives backed single-stock circuit breakers at the House Financial Services subcommittee hearing in Washington on Tuesday, but did not detail thresholds or timeframes.

“There may be some technological issues in putting those in place but I think those are short-dated, not long-dated,” Eric Noll, executive vice president of Nasdaq OMX Group Inc’s (NDAQ.O: ) transaction services, told lawmakers.

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(Reporting by Jonathan Spicer; Editing by Tim Dobbyn)

New circuit breaker for S&P single stocks: source