The Securities and Exchange Commission (SEC) approved new rules submitted by the national securities exchanges and FINRA on Friday, September 10. The rules expand a recently-adopted circuit breaker program to include all stocks in the Russell 1000 Index and certain exchange-traded funds.
The SEC also approved new exchange and FINRA rules that clarify the process for breaking erroneous trades, it said in a press release.
The circuit breaker pilot program was approved in June in response to the market disruption of May 6.
If a security experiences a 10% percent price change over a five-minute period, trading in it is paused for five minutes.
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“The pause gives the markets an opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion,” the SEC said in a statement.
The circuit breaker program is in effect through December 10. The SEC anticipates that the exchanges and FINRA will begin implementing the expanded circuit breaker program early in the week of September 13-17.