SEC circuit-breaker rules to apply to more firms

U.S. Securities and Exchange Commission Chairwoman Mary Schapiro said Tuesday that the agency would expand the list of companies that would be covered by a proposal to halt trading of stocks after they’ve risen or fallen 10% during a five-minute period.

The SEC intends to add “thousands” of companies to a roster that would initially include companies in the Standard & Poor’s 500 index, Schapiro said. Trading curbs are being proposed in response to the May 6 stock plunge that erased $862 billion from U.S. equities in 20 minutes and briefly drove the Dow Jones industrial average down 1,000 points.

Regulators are devising new rules to try to restore investor confidence in markets. SEC commissioners plan to vote this week on so-called circuit breakers for S&P 500 stocks and implement the trading curbs as soon as next week.

Stock exchanges on May 18 proposed methods to halt trading across their markets when a stock in the S&P 500 — the benchmark index for U.S. equities — moves 10% in five minutes. When a stock hits that threshold trading would be paused for five minutes. That would supplement existing rules, including a halt in trading when the Dow Jones industrial average falls 10% from the previous day’s close.