Caution Advised Before Altering ‘Circuit Breaker’

A congressman who has taken a lead in promoting securities reforms has asked the Securities and Exchange Commission to proceed carefully before changing so-called circuit-breaker rules that nearly halted New York Stock Exchange trading earlier this month.

Rep. Edward Markey (D-Mass.) made the request in a letter to SEC Chairman Arthur Levitt that addressed the talks being conducted among the regulatory agency, stock markets and brokerage firms.

The discussions are occurring in the wake of the 217-point fall of the Dow Jones industrial average March 8. Had the average fallen 250 points, the circuit-breaker rules would have forced a one-hour halt in trading. Several market analysts have called for a loosening of the rules, arguing that such sell-offs shouldn’t force trading halts.

“The sheer size of the market movements that could occur in absolute terms before a trading halt was activated could be extremely disturbing to less sophisticated investors and possibly disrupt fair and orderly markets,” wrote Markey, the ranking Democrat on the House Commerce subcommittee on telecommunications and finance.