The SEC granted accelerated approval to proposed circuit breaker rule changes by several major exchanges. The exchanges proposed to amend certain of their rules or adopt new rules to provide for trading pauses in individual stocks for which they are the primary listing market when the price moves ten percent or more in the preceding five minute period.

When a trading pause is issued, the listing market will notify other market participants by immediately disseminating a special indicator over the consolidated tape, and the other exchanges would be required to pause trading in that security on their markets. After five minutes, the listing market would reopen trading in the security, and trading would resume on the other exchanges and in the over-the-counter market. The other exchanges may resume trading, however, if the primary listing market does not reopen within ten minutes. The trading pause requirements would apply only from 9:45 A.M. until 3:35 P.M. in order to avoid interference with existing procedures for orderly openings and closings.

The rule changes were proposed in response to the severe disruption in U.S. equity markets that occurred on May 6, 2010. The Commission noted that, by consensus and after consultation with each other, all of the SROs filed proposed rule changes to provide for similar trading pauses on May 18 and 19. These rule changes will be implemented as a pilot program ending on December 10, 2010 and will be in effect only with respect to securities included in the S&P 500 Index.

The SEC also granted accelerated approval to a proposed rule change permitting FINRA to halt trading by its members otherwise than on an exchange where a primary listing market has issued a trading pause due to extraordinary market conditions. The amendment to FINRA Rule 6121 on trading halts provides for a pause in trading in the over-the-counter market by FINRA members when a listing market has issued a trading pause. The trading pause requirements would apply only from 9:45 A.M. until 3:35 P.M. in order to avoid interference with existing procedures for orderly openings and closings. This rule change will be implemented as a pilot ending on December 10, 2010, and will be in effect only with respect to securities included in the S&P 500 Index. According to the Commission, FINRA plans in the near future to file an additional proposal expanding the scope of the pilot program.

□ Release No. 34-62251 is reported at ¶89,037, and Release No. 34-62252 is reported at ¶89,038.