US to tighten rules in wake of flash crash

first_img whatsapp whatsapp Wednesday 11 August 2010 8:43 pm Tags: NULL Share Read This Next’A Quiet Place Part II’ Sets Pandemic Record in Debut WeekendFamily ProofHiking Gadgets: Amazon Deals Perfect For Your Next AdventureFamily ProofBack on the Rails for Summer New York to New Orleans, Savannah and MiamiFamily ProofIndian Spiced Vegetable Nuggets: Recipes Worth CookingFamily ProofAmazon roars for MGM’s lion, paying $8.45 billion for studio behind JamesFamily ProofYoga for Beginners: 3 Different Types of Yoga You Should TryFamily ProofTortilla Mango Cups: Recipes Worth CookingFamily ProofWhat to Know About ‘Loki’ Ahead of Disney+ Premier on June 9Family ProofThe Truth About Bottled Water – Get the Facts on Drinking Bottled WaterGayot Show Comments ▼ KCS-content US to tighten rules in wake of flash crash US regulators are considering sweeping measures to prevent a repeat of the so-called “flash crash” of 6 May, when the Dow Jones sparked panic by falling 1,000 points in 45 minutes.The Securities and Exchange Commission (SEC) and Commodities and Futures Trading Commission (CFTC) may extend upward and downward limits on stock movements. In June, the SEC approved rules to suspend trading in S&P 500 shares which see a 10 per cent swing in price during a five-minute period. The restrictions could be applied to securities from other indices. The authorities are also mulling a ban on “stub” quotes used by market makers.Mary Schapiro, chairman of the SEC, announced the possible steps at a hearing to discuss the freak financial event three months ago. The crash saw around 55 stocks on the S&P 500 dive precipitously in the space of minutes before climbing back to their normal levels. Among those affected were Accenture, whose price plunged from $40 per share to one cent, and Procter & Gamble, which lost 35 per cent of its market value.The SEC and CFTC taskforce will deliver a report addressing the occurrence early next month. Some members warned a similar lightning bolt could strike again. CFTC commissioner Michael Dunn said: “One thing really struck me today… what happened on 6 May can happen again. In fact, [people] expect it to happen.”One senior Democratic senator, Charles Schumer, called on the panel to force market makers to step in and provide liquidity at times of rapid, unexpected price declines.FAST FACTS | FLASH CRASHHigh frequency trading, whereby computer algorithms transact large volumes of shares in split seconds, has been seen as a possible cause.The four main US public exchanges now have “circuit breakers” on S&P 500 stocks. last_img

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