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AP Sources: Exchanges to impose new trading rules
U.S. stock exchanges would briefly halt trading of some stocks that have big prices swings under new trading rules aimed at avoiding market plunges, according to two people familiar with the plan.

The rules are expected to begin in mid-June under a six-month pilot program agreed to by exchanges and regulators, the people said. They spoke on condition of anonymity because the plan has not been made public.

An announcement could come Tuesday.

Under the plan, trading of any Standard & Poor's 500 stock that rises or falls 10 percent or more would be halted for five minutes. These rules, known as "circuit breakers," would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. Eastern time. That's almost the entire trading day.

The rules are intended to prevent a repeat of the May 6 market plunge in which the Dow Jones industrials fell to a loss of almost 1,000 points in less than 30 minutes. The pilot program is scheduled to end Dec. 10. Regulators and the exchanges would then decide whether to widen the program to include other stocks, according to the people.

Federal investigators on Tuesday will submit preliminary findings into the plunge, Securities and Exchange Commission Chairman Mary Schapiro told a gathering of financial analysts. She said the exchanges were also expected to propose new trading rules.

Schapiro appeared from Washington by video link rather than traveling to speak in Boston to the Chartered Financial Analysts Institute's convention, citing the demands of an investigation she said is "keeping me up at all hours of the morning."

She said her agency is "looking at a number of issues we think can be remediated quickly even before we understand necessarily what the exact cause of the crash was."

The May 6 plunge briefly wiped out more than $1 trillion in the market value of stocks. The Dow later recovered somewhat to finish the day down 347 points.

The plunge stunned Wall Street and Washington, and prompted calls for changes in securities market rules and procedures. Most of the 50 or so U.S. exchanges regulate themselves and design their own tools for slowing or halting trading.

During the plunge, the New York Stock Exchange slowed trading according to its rules, but the orders that couldn't be executed automatically migrated in a torrent to electronic exchanges, industry officials said.
http://news.yahoo.com/s/ap/20100518/ap_on_bi_ge/us_market_plunge_sec