New curbs to limit rapid price moves in individual stocks and changes to rules designed to prevent market-wide routs may be delayed two months until April, according to exchange operator BATS Global Markets Inc.
The shift from circuit breakers that make trading pause if a stock rises or falls 10 percent in five minutes to curbs that limit moves without automatically triggering a halt will take effect April 8 instead of Feb. 4, subject to regulatory approval, the Lenexa, Kansas-based company said in a notice on its website.
Changes to an existing program that stops all equity-based trading across stocks, options and futures will also be delayed, Bats said in the statement.
Both measures are meant to protect investors from extreme price moves. The gauge that will trigger the marketwide circuit breakers is switching from the Dow Jones Industrial Average to the Standard & Poor’s 500 Index, while the price drop for trading to stop is being narrowed and the length of pauses shortened in most cases. The so-called limit-up/limit-down plan, which prevents individual stocks from moving outside a rolling price band, will replace the automatic halts implemented after the flash crash on May 6, 2010, when the 30-stock Dow average briefly fell 9.2 percent.
The U.S. Securities and Exchange Commission must approve the request to delay implementation of the limit-up/limit-down plan by the 13 stock exchanges and Financial Industry Regulatory Authority, which oversees more than 4,300 brokers, for it to go into effect. A separate delay request would have to be submitted by securities exchanges and Finra for the market-wide circuit breakers, introduced after the October 1987 market crash.
John Nester, a spokesman for the SEC, declined to comment. Also declining to comment were Keara Everdell, a spokeswoman for NYSE Euronext, Robert Madden of Nasdaq OMX Group Inc. and Jim Gorman at Direct Edge Holdings LLC.
