Kelley Drye

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SEC Approves SRO Proposals to Address Extraordinary Volatility in Individual Stocks and Broader Stock Market

August 10, 2012 | The Association of Corporate Counsel

This article explains two SEC approved proposals, submitted by the national securities exchanges and FINRA, designed to address extraordinary volatility in individual stocks as well as the broader U.S. stock market. One initiative establishes a "limit up-limit down" mechanism to prevent trades in individual exchange-listed stocks outside of a specified price brand. The second initiative updates existing market-wide circuit breakers that when triggered, halt trading in all exchange-listed securities throughout the U.S. markets. The authors describe the initiatives, the SEC's response, and additional measures taken to address volatility.

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