By Nina Mehta
June 2 (Bloomberg) -- Nasdaq OMX Group Inc. proposed an expansion on its markets of measures to halt stocks during periods of volatility, adding circuit breakers to all the companies it lists and a tiered system that pauses trading based on different percentage moves.
The Nasdaq program would add halts for faster price changes than are covered by a Securities Exchange Commission proposal last month. While the agency will begin a pilot next week in which Standard & Poor’s 500 Index stocks that swing more than 10 percent within five minutes are delayed, Nasdaq will pause trading for a minute during moves over 30 seconds or less, said Eric Noll, executive vice president at New York-based Nasdaq.
Exchanges and regulators are examining ways to slow down trading during investor panics after the market plunge on May 6 showed how conflicting rules across as many as 50 different U.S. equity venues may worsen selloffs. The rout erased $862 billion from the value of U.S. equities in less than 20 minutes and drove the Dow Jones Industrial Average to an almost 1,000-point decline, according to data compiled by Bloomberg.
“We’ve always seen this as an issue,” Noll said. “With the circuit-breaker bands now being introduced in the marketplace, we can provide solutions that affect specific volatility concerns in our market.” The events on May 6 caused Nasdaq to pursue this mechanism “in a much more aggressive way,” he said.
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Chairman and CEO, Rick Ketchum, issued FINRA's 2009 Year in Review statement recently.