Circuit Breaker for Individual Stocks - Pilot Program

By William  James, Senior Securities Editor

For those equity securities that comprise the S&P 500 Index, the SEC has approved a pilot program that calls for a 5-minute pause in trading initiated by the primary listing market if the individual stock experiences a 10% or more price change.  Following the pause, the stock will be re-opened by the primary listing market.  

 E.g. On June 14, 2010, AAPL which, on that date, is a component of the S&P 500 Index has an opening price of 253.51.  Should AAPL fall to 228.15, the NASDAQ (GS) would initiate a pause for 5 minutes.  In the case of NASDAQ specifically, the security will reopen using the NASDAQ Halt Cross process.  (See NASDAQ Rule 4753).

This pilot program will last through December 31, 2010. I wouldn't be surprised to see it become permanent.  I'll be keeping an eye on it.