WASHINGTON — Federal regulators on Thursday put in place new rules aimed at preventing a repeat of last month’s harrowing “flash crash” in the stock market.
Members of the Securities and Exchange Commission approved the rules, which call for U.S. stock exchanges to briefly halt trading of some stocks that make big swings.
The major exchanges will start putting the trading breaks into effect as early as today for six months. The New York Stock Exchange will begin today’s trading session with five stocks subject to the new rules: EOG Resources Inc., Genuine Parts Co., Harley Davidson Inc., Ryder System Inc. and Zimmer Holdings Inc. The exchange will gradually add other stocks early next week, expecting to reach by Wednesday the full number that will be covered.
The Nasdaq plans to have the program in place Monday.
The plan for the “circuit breakers” was worked out by the SEC and the major exchanges after the May 6 market plunge, which saw the Dow Jones industrials lose nearly 1,000 points in less than a half-hour.
Under the new rules, trading of any Standard & Poor’s 500 stock that rises or falls 10 percent or more in a five-minute period will be halted for five minutes. The “circuit breakers” would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. Eastern time. But it leaves out the final 25 minutes before the close — a period that often sees raging price swings.
