NEW YORK (CNNMoney.com) -- The Securities and Exchange Commission approved new rules Thursday that will halt trading uniformly across all U.S. markets for stocks experiencing wild price swings to prevent a repeat of last month's "flash crash."
Under the new rules, which could go into effect as early as Friday, exchanges are required to stop trading in an individual stock for five minutes across U.S. stock markets if the stock experiences a 10% price swing in the preceding five-minute period.
The pause, also called a circuit breaker, "would give the markets the opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion," the SEC said in a statement.
The SEC proposed the rules last month in response to the market's so-called "flash crash," when about 30 stocks dropped at least 10% in a five-minute period and the Dow Jones industrial average (DJIA) plummeted nearly 1,000 points.
"The May 6 market disruption illustrated a sudden, but temporary, breakdown in the market's price setting function when a number of stocks and ETFs were executed at clearly irrational prices," SEC Chairwoman Mary Schapiro said in a prepared statement.
"By establishing a set of circuit breakers that uniformly pauses trading in a given security across all venues, these new rules will ensure that all markets pause simultaneously and provide time for buyers and sellers to trade at rational prices," Schapiro said.
The new rules are expected to be adopted as early as Friday and will be implemented on a pilot basis through Dec. 10 to give markets time to make adjustments to the new circuit breakers, according to the SEC.
As of now, the pause will only apply to stocks in the Standard & Poor index, but the SEC said it hopes to expand the rules to include other securities "as soon as practicable."
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.69%||3.76%|
|15 yr fixed||2.80%||2.82%|
|30 yr refi||3.69%||3.76%|
|15 yr refi||2.83%||2.83%|
Today's featured rates:
Anheuser-Busch has been the exclusive beer advertiser featured during the Super Bowl since 1975, and it's spent more on Super Bowl advertising than any other company for the last five years in a row. More
The economy is better than it was, but not even President Obama is ready to declare it's booming. More
Laurie Segall sits down with Foursquare's new CEO Jeff Glueck to discuss the company's latest round of funding at a lower valuation, and their hybrid consumer/enterprise business model. More
Nonprofit JumpStart has launched a new $10M fund that will only invest in women and minority-led startups. The catch: You have to move to Ohio. More
Portland, Oregon, is often described as the last affordable cool city on the West Coast. But as more people move to the city, it's becoming increasingly unaffordable. More