The Securities and Exchange Commission has approved the Nasdaq Stock Market’s request to be able to suspend trading of a company’s stock for one minute if the price of the stock exceeds certain thresholds, measured over the preceding 30 seconds. The new policy is another market circuit-breaker that regulators hope will prevent a repetition of the U.S. stock markets’ “flash crash” last May.
The SEC’s March 11 approval lets Nasdaq implement a volatility-based trading pause (called a “volatility guard”) in 100 securities listed on the exchange on a six-month pilot basis. During this trial period, Nasdaq is to provide the SEC with data on the efficiency and effect of the guard.
