U.S. exchanges want tighter U.S. circuit breakers

Reuters

(Reuters) - U.S. exchanges and a Wall Street regulator want to tighten the 23-year-old circuit breakers that did not trip during last year's "flash crash," the Securities and Exchange Commission said on Tuesday.

The adjustments would include lower percentage thresholds for halting stock trading, shorter halts, and changing the reference index to the broader Standard & Poor's 500 from the current Dow Jones industrial average, the SEC said.

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The government regulator is expected to formally adopt the changes after a 21-day public comment period.

The new breakers, designed to pause trading in all exchange-listed securities throughout U.S. markets, are the latest in a long line of responses to the May 6, 2010, crash -- which revealed deep flaws in U.S. market structure, spooked investors and embarrassed exchanges and regulators.

The market-wide breakers, adopted back in 1988, did not stop the nearly 700-point crash in the Dow because their trigger thresholds were so broad.

NYSE Euronext, Nasdaq OMX Group and other exchange operators, as well as the Financial Industry Regulatory Authority, proposed tightening the thresholds to 7, 13 and 20 percent lower than the previous day's close, from the current 10, 20 and 30 percent, the SEC said.

The breakers would be based on only two time periods -- before and after 3:25 p.m. Eastern time -- rather than six, under the plan.

(Reporting by Jonathan Spicer, editing by Maureen Bavdek and Gerald E. McCormick)