Fair and consistent by the arbitrary measures of a bunch of people who don't know what a buy or sell order is or by the measures of the people who actually have their own capital behind the trades? Which do you think is more fair and accurate? The standards of a bunch of people who spend every moment of their day downloading so much pornography they crash their hard drives or the people who have their own capital on the line? 'Coz the people with a vested interest already voted with their dollars. Who are the useless porn pervs to contradict them?
maybe a better article; http://www.usatoday.com/money/companies/regulation/2010-05-18-freefall-changes_N.htm?csp=15 "Under the plan, trading of any Standard & Poor's 500 stock that rises or falls 10% or more within a five-minute span would be halted for five minutes. These rules, known as "circuit breakers," would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. Eastern time. That's almost the entire trading day."
I agree. The SEC is really screwing with the market to try to correct the iliquidity it caused with all of its bans and trading rule changes since 2008. It's trying to supplant the liquidity normally provided by market makers (who have steadily left the business to HFT shops) with trading stops. The only problem is that there are no rules about where the market must re-open after the circuit breaker is tripped. If there were such rules they'd be useless as liquidity providers would never agree to take such a risk and then what liquidity is left would be gone. So, if a company reveals REALLY bad news and trades down 10%, the breaker is tripped. When it re-opens, it'll re-open down 50% with no opportunity to trade anywhere between down 10% and down 50%. The market will become very volatile and the risk will be higher. Given the fact that more onerous shorting restrictions prevent people from hedging, the risks of the market will become exaggerated. This is so stupid.
The something really bad has already happened - we've abdicated too much power to the political class by screaming "there should be a law" every time something didn't turn out the way we'd hoped. Now, we're just watching the bill come due.
Do any of you guys actually trade or are you just career poster's? How many SP500 stocks move 10% in 5 minutes in any given month? Not many thats for damn sure.
There's a really big difference between up/down 10% in five minutes and up/down 10% on the entire day. The vast majority of 'real' moves wouldn't be impeded while it'd make things like the DNDN crash (down 70% in 70 seconds), and of course the ol' forty-bucks-to-one-cent, impossible for S&P stocks.
earning miss, lawsuit, FDA phase II failed, etc..... almost everyday, there are few stocks that have 20% gap downs. If FDA decision comes in trading hours, I have seen plenty small bio companies took 80% haircut in 1 minute.