Exchanges Move to Extend Individual-Stock Circuit Breakers

As expected, the U.S. equities exchanges are proposing to extend the pilot program for individual-stock circuit breakers.  NYSE Euronext filed last night  proposals to the Securities and Exchange Commission for our NYSE, NYSE Amex and NYSE Arca exchanges.  The pilot is otherwise scheduled to expire on 10 Dec.

To review what this is about, here's an excerpt from our filings:

"Rule 80C requires the Exchange to pause trading in an individual security listed on the Exchange if the price moves by 10% as compared to prices of that security in the preceding five-minute period during a trading day, which period is defined as a “Trading Pause.” The pilot was developed and implemented as a marketwide initiative by the Exchange and other national securities exchanges in consultation with the Commission staff and is currently applicable to all S&P 500 1Index securities, Russell 1000 Index securities, and specified exchange-traded products."

And why the extension?

"The extension proposed herein would allow the pilot to continue to operate without interruption while the Exchange, other national securities exchanges and the Commission further assess the effect of the pilot on the marketplace or whether other initiatives should be adopted in lieu of the current pilot. 

For those interested in detail, here's our filing for NYSE; the proposals for NYSE Arca and NYSE Amex are substantively the same. 

At the same time, we also filed to extend for the same period of time another pilot, this one concerning "clearly erroneous trades."  That program "set  forth clearer standards and curtail discretion with respect to breaking erroneous trades."  Extending that pilot allows it to continue in force for the same time as the individual-security circuit breakers, and also "would permit the Exchange, other national securities exchanges and the Commission to further assess the effect of the pilot on the marketplace, including whether additional measures should be added, whether the parameters of the rule should be modified or whether other initiatives should be adopted in lieu of the current pilot."

All of this might seem arcane -- as the elimination of stub quotes perhaps did earlier this week -- but these are all steps toward preventing another May 6-type event.  It's important to investor confidence and participation that the exchanges operate reliably and credibly.  We and the other exchanges are continuing to work closely with the SEC toward that goal.