1 See Memorandum to Accounting/Treasurers Committee No. 14-96, SEC Rules Committee No. 29-96, Equity Markets Task Force, dated May 1, 1996.
May 23, 1996
TO: ACCOUNTING/TREASURERS COMMITTEE No. 22-96
SEC RULES COMMITTEE No. 46-96
EQUITY MARKETS TASK FORCE
RE: INSTITUTE COMMENT LETTER ON NYSE ""CIRCUIT BREAKER""
PROCEDURES
______________________________________________________________________________
The Securities and Exchange Commission recently published a rule proposal by the
New York Stock Exchange, Inc. (NYSE) to amend its "circuit breaker" procedures.1 The Institute
submitted to the SEC today the attached comment letter on the proposal.
While the Institutes comment letter generally supports the NYSEs reconsideration of
the "circuit breaker" procedures in light of market changes since they were first established in
1988, it argues that the proposed amendments do not go far enough. Specifically, the letter
argues that the current trading halt triggers of 250 and 400 points of the Dow Jones Industrial
Average should be increased, because they no longer appear to be reflective of "extraordinary
market volatility." The letter recommends that no action be taken on the proposal until there
has been an opportunity for public comment on increasing the trading halt triggers to more
appropriate levels. The letter also seeks reconsideration of the proposal to reopen trading after
4:00 p.m. The proposal does not specify, for example, how long the NYSE would remain open
after 4:00 p.m., which may, among other things, adversely affect mutual funds ability to meet
the deadline for publishing their per share price in the next days newspapers.
Alexander C. Gavis
Assistant Counsel
Attachment