US regulators call for circuit-breakers but exchange risks remain, says expert
Proposed rule changes from Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (Finra) are a good but incomplete solution to operational risk within exchange infrastructures
Regulators this week announced proposed new rules introducing so-called 'circuit-breakers' to the New York Stock Exchange (NYSE) designed to prevent future shock stock falls in the wake of the brief plummeting of Dow Jones index shares on May 6.
If a stock price moves up or down by 10% or more in a five-minute period, the proposed rules would introduce circuit-breakers that would kick in across US equity markets, immediately pausing trading on the affected stock for the following five minutes.
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