First, do no harm

19 May 2010 By Agnes Crane

The flash crash in U.S. stock markets scared regulators and stock exchanges. Revamping marketwide circuitbreakers makes sense, but putting narrow limits on individual stocks may be overkill. The goal should be to stop crashes, not interfere with legitimate trade.

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U.S. stock exchanges and regulators plan to launch a pilot program aimed at averting the type of "flash crash" seen in the U.S. stock market on May 6, the Securities and Exchange Commission said on May 18. On that day, the closelywatched Dow Jones Industrial Average fell nearly 1,000 points in minutes before recovering.

The pilot program, subject to public comment, would apply to individual stocks. If a company's stock rises or falls more than 10 percent in five minutes, trading in its shares will be halted for five minutes. The appropriate levels for circuitbreakers for the overall market are also under consideration.

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