If securities regulators In the United States go ahead with proposed changes to their market-wide circuit breakers, Canadian regulators may follow suit.

The U.S. Securities and Exchange Commission is proposing a series of changes the existing market circuit breakers, reducing the percentage decline required to trigger a halt, shortening the duration of halts, recalibrating the triggers daily rather than quarterly, and changing the reference index.

Currently, the Investment Industry Regulatory Organization of Canada gears circuit breakers for the Canadian market to the U.S. market, given the large amount of inter-listed trading that takes place, so the proposed changes could be followed here, too.

IIROC says that it is reviewing the proposed U.S. reforms, and that it will wait to see what, if any, changes the U.S. adopts, and then it will decide whether they would be appropriate for the Canadian market.

So far, the U.S. securities industry appears to be supporting the proposals. The Securities Industry and Financial Markets Association released a statement from Randy Snook, executive vice president, saying, “Today’s newest proposals from regulators and the exchanges are a further step in the right direction toward strengthening our markets and modernizing the rules that govern them.”

“Updating system-wide circuit breakers to work more appropriately in today’s trading environment is critical, as none of them were triggered by the events of May 6,” he added. “While we still need to review these proposals further, we generally believe they make necessary changes that reflect the current market environment and look forward to seeing them implemented as soon as possible.”

IE