SEC Announces Filing of Limit Up-Limit Down Proposal to Address Extraordinary Market Volatility

On April 5, 2011, the Securities and Exchange Commission announced that national securities exchanges and the Financial Industry Regulatory Authority (FINRA) today filed a proposal to establish a new “limit up-limit down” mechanism to address extraordinary market volatility in U.S. equity markets.

Under the proposal, trades in listed stocks would have to be executed within a range tied to recent prices for that security.

If approved by the Commission, the new limit up-limit down mechanism would replace the existing single stock circuit breakers, which were approved on a pilot basis shortly after the market events of May 6, 2010.

The SEC will seek comment on the proposed plan, which is subject to Commission approval following a 21-day public comment period.