SEC backs 'circuit breaker' rules

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The Securities and Exchange Commission has given the green light to new rules designed to tame wild share price movements.

The US market regulator yesterday backed rules that will see exchanges halt business in individual stocks if the price swings by 10 per cent or more in a five-minute period. The pause will last for five minutes, giving market participants time to regain their composure and resume trading in an orderly fashion.

The rules, which will apply to stocks in the S&P 500, and which will initially run on a pilot basis until December, come in response to the so-called "flash crash" in May, when the Dow Jones Industrial Average suffered its worst ever intra-day declines. Exchanges are expected to begin implementing the new measures from as early as today.