NYSE Proposes to Ease Curbs Set Off by Market Swings

The New York Stock Exchange is proposing to loosen restrictions triggered by certain market swings for the first time since they were imposed, after the 1987 stock market crash.

The so-called circuit breakers were designed by the NYSE and the Securities and Exchange Commission to slow the market’s plunge in the event of a big sell-off.

Concern that the rules are out of date has grown since 1988, when they went into effect, as the Dow Jones industrial average has more than doubled in value.

The NYSE said Monday that it wants to ease two of its strictest curbs, which temporarily shut down trading. According to the proposals, a change of 250 points in the Dow from the previous day’s close would mandate a halt in trading for 30 minutes, down from one hour. With a 400-point change in the Dow, the trading delay would be cut to one hour from two.

The exchange would not change its most commonly used curbs--those that limit trading when the market moves by 50 points. These curbs are routinely put into effect, as on Monday, when the Dow plunged 88.51 points.

The NYSE board approved the proposals last Thursday and plans to submit them to the SEC for approval in the next few days, an NYSE spokesman said.

There would be no changes to limits in computer-generated trading that kick in after the Dow moves 50 points in either direction from the previous day’s close.

Proponents say these smaller limits are working to smooth out sharp price swings because they delay knee-jerk transactions from large investors with preprogrammed electronic orders to buy or sell.

NYSE board members believe that the shorter delays would answer criticism that the curbs now have the potential for being too disruptive. The stock exchange narrowly avoided closing on March 8 when the Dow approached the 250-point threshold in its final hour.