The U.S. Securities and Exchange Commission approved new rules on Friday, expanding single-stock circuit breakers to include all stocks in the Russell 1000 Index and certain exchange-traded funds.

The move comes a day after Canadian regulators said that they would also consider adopting single stock circuit breakers, along with several other policy changes, in response to the “flash crash” that affected certain stocks and ETFs on both sides of the border on May 6.

U.S. regulators introduced the new circuit breakers soon after the crash, although they were initially limited to stocks in the S&P 500 index. Under the new policy, trading is paused for a five-minute period if a security experiences a 10% price change over the preceding five minutes.

“The pause gives the markets an opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion,” the SEC says. The circuit breaker program is in effect on a pilot basis through Dec. 10.

On Friday, it approved new rules, submitted by the national securities exchanges and the Financial Industry Regulatory Authority, expanding the pilot program to a wider range of securities. The SEC also approved new exchange and FINRA rules that clarify the process for breaking erroneous trades. The SEC anticipates that the exchanges and FINRA will begin implementing the expanded circuit breaker program early next week.

“These circuit breakers and this more objective guidance on breaking erroneous trades will help our markets retain the confidence of investors and companies,” said SEC chairman Mary Schapiro. “We have worked quickly with the exchanges to take these steps, and we will continue to be very focused on addressing weaknesses exposed on May 6.”

The markets will continue to use the pilot period to make appropriate adjustments to the parameters or operation of the circuit breakers based on their experience, the SEC added.

The new erroneous trade rules are also in effect on a pilot basis until Dec. 10, for stocks that are subject to the circuit breaker program. Under the rules, trades will be broken at specified levels depending on the stock price: for stocks priced $25 or less, trades will be broken if the trades are at least 10% away from the circuit breaker trigger price; stocks priced between $25 to $50 will see trades will be broken if they are 5% away from the trigger price; and for stocks priced at more than $50, trades will be broken if they are 3% away from the trigger price.

Where circuit breakers are not applicable, the exchanges and FINRA will break trades at specified levels for events involving multiple stocks depending on how many stocks are involved. For events involving between five and 20 stocks, trades will be broken that are at least 10% away from the “reference price,” which is typically the last sale before pricing was disrupted; and, events involving more than 20 stocks will see trades broken that are at least 30% away from the reference price.

On May 6, the markets only broke trades that were more than 60% away from the reference price in a process that was not transparent to market participants.

“By establishing clear and transparent standards for breaking erroneous trades, the new rules should help provide certainty in advance as to which trades will be broken, and allow market participants to better manage their risks,” the SEC said.

SEC staff is also considering whether market makers should be subject to more meaningful obligations to promote fair and orderly markets. They are working with the exchanges to prohibit the use of “stub” quotes that are not intended to indicate actual trading interest. They are studying the impact of multiple trading protocols at the exchanges, including the use of trading pauses and self-help rules. And, they plan to consider recalibrating market-wide circuit breakers.

Many of these same sorts of reforms are also under consideration by Canadian regulators.

IE