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"We are considering whether other steps are appropriate to reduce the risk of sudden disruptions and clearly erroneous trades," SEC Chairman Mary L. Schapiro said at the outset of a meeting of the Joint Advisory Committee of the SEC and the
The one-cent trades, which occurred in Accenture's case in one 10-second period, have been attributed to the presence of "stub" quotes put in by market makers who never expect such residual orders to actually be executed. But, when no other orders exist to buy, they take effect.
Schapiro said the SEC is considering "deterrring or prohibiting the use of stub quotes by market makers" and that the SEC is "studying the impact of trading protocols at individual exchanges, including the use of trading pauses, price collars and self-help rules.
The
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In effect, a band of, say, 3% on either side of a price would be constantly maintained. If the next trade fell outside that band, the trade would be stopped.
Also, commodities markets used limits that apply to full days of trading. A "limit down" sets the maximum amount by which the price of a futures contract may decline in one trading day. "Limit up" establishes the maximum gain in a day.
So far, the SEC has been pursuing two policy initiatives, since the Flash Crash.
The Commission established a circuit-breaker tack that stops trading in individual stocks whose prices move 10% in five minutes. Right now, the breaks apply only to stocks in the
Schapiro said she hopes the commission approves the expansion "very soon."
The SEC is also working with national exchanges and the
Schapiro said the SEC and CFTC hope to deliver their report and analysis on the events of May 6 some time next month.
For the report, she said SEC staff has been reviewing raw transaction and order data, order book snapshots, trade summaries, information about broken trades and information on the
The Commission is also taking in "first-hand accounts" of what went on from market participants.