• SEC Approves Circuit Breaker Rules In Response To “Flash Crash” Of May 6, 2010
  • July 1, 2010 | Authors: Jerry J. Burgdoerfer; William L. Tolbert; Elaine Wolff
  • Law Firms: Jenner & Block LLP - Chicago Office ; Jenner & Block LLP - Washington Office
  • On June 10, the Securities and Exchange Commission (“SEC”) approved circuit breaker rules to be implemented as soon as June 11, that will pause trading for five minutes in certain individual stocks if the price moves ten percent or more in a five-minute period. The rules will be implemented on an expedited basis in response to the so-called “Flash Crash” of May 6, 2010 when prices of a large number of individual securities declined dramatically in a matter of minutes. The events of May 6 have been described by SEC Chairman Mary L. Schapiro as a “sudden evaporation of meaningful prices for many major exchange-listed stocks in the middle of a trading day.” Price volatility was so extreme that day that many trades were subsequently broken by the Exchanges and many were executed at more than 60% away from predecline prices.