SEC Urges Markets to Ease Circuit Breakers

U.S. stock markets need to further loosen so-called circuit breakers so trading would be halted only during declines of “historic proportions,” the Securities and Exchange Commission said. Circuit breakers were established after the October 1987 crash to avert panic selling by imposing a series of increasingly tough trading restrictions on the New York Stock Exchange and other major stock markets. If the Dow Jones industrial average falls more than 250 points, trading in all stock markets and related stock futures markets is halted for 30 minutes. After a 400-point decline, the markets shut down for an hour. Neither trading halt has ever been called. At the market’s current record levels, the Dow has to plunge only 4.1% to set off the 250-point circuit breaker and 6.6% to trigger the 400-point limit. “The commission strongly urges the markers to reach a consensus as soon as possible on the size of increases in the current trigger levels,” the SEC said.