SEC Approves Proposals to Address Extraordinary Volatility in Individual Stocks and Broader Stock Market
The SEC has approved two proposals submitted by the national securities exchanges and the FINRA that are designed to address extraordinary volatility in individual securities and the broader U.S. stock market.
The exchanges and FINRA will implement these changes by February 4, 2013. On Thursday, the SEC approved both proposals for a one-year pilot period, during which the exchanges, FINRA, and the SEC will assess their operation and consider whether any modifications are appropriate.
Under the new plan all trading centers, including exchanges, automated trading venues, and broker-dealers executing trades internally, must establish policies and procedures to prevent trades from occurring outside the applicable price bands, honor any trading pause, and otherwise comply with the procedures set forth in the plan.
Among other recommendations noted in the press release, the SEC staff also is considering what additional measures may be needed, including establishing a consolidated audit trail system to better track orders and trades in securities across the national market system.
Additional Materials:
View press release in full here (links externally to SEC website).