13 Jun 2010

'Circuit breaker' to stop big share swings

9:40 am on 13 June 2010

New trading restrictions are being imposed on some US stocks to try to avoid a repeat of the plunge in share values on Wall Street last month.

On 6 May, a market fall quickly spread out of control, driving the Dow Jones down some 700 points within minutes.

An investigation into the mysterious plunge found no single cause was to blame, the BBC reports.

The Securities and Exchange Commission has implemented so-called "circuit breakers" which will halt trading in some stocks for five minutes, if they fall more than 10% in five minutes.

The pause is designed to draw attention to an affected stock, establish a reasonable market price and then resume trading "in a fair and orderly fashion", the SEC said.

The trading breaks applied to selected stocks from Friday and will eventually be rolled out across all those listed on the New York Stock Exchange.