Shanghai: All US stocks will probably be subject to so-called circuit breakers by the end of this year, Duncan Niederauer, chief executive officer of stock exchange operator NYSE Euronext, said on Thursday.
The circuit breakers, a mechanism to halt trading in a stock for five minutes if it falls more than 10% within five minutes, will initially apply to stocks in the Standard & Poor’s 500 index under a proposal by the Securities and Exchange Commission as regulators try to avoid a repeat of the mysterious 6 May market slide that quickly spiralled out of control.
“They need to be applied to all the markets, not just some of the markets,” Niederauer said, suggesting the circuit breakers also apply to exchange-traded funds, something the SEC has said may happen later.
“Our expectation is that they will be more aligned with the underlying liquidity of the individual securities, probably by the end of the year, which will be coincidental with some other changes the SEC is contemplating for revaluating the market structure of the United States on a more comprehensive basis.”
For example, some stocks need to fall 10% to trigger the circuit breaker mechanism while some others only need to fall 5% or 2%, he said.
Speaking in Shanghai, from where the New York Stock Exchange will be remotely opened on Thursday, Niederauer also said he expected China to allow foreign companies to list on its stock markets by the end of this year or early next year.
“A number of multinational companies listed on our exchange ... are expressing more and more interest in listing on the international board in Shanghai,” Niederauer said.
NYSE Euronext’s board has discussed a potential Shanghai listing on several occasions, and “we’re still interested and very focused on this initiative,” he said.
China plans to allow domestic listings of overseas firms as part of efforts to deregulate its capital markets.
Chief operating officer Larry Leibowitz told Reuters in March that NYSE Euronext hoped to be one of the first foreign companies to list on the Shanghai Stock Exchange, but the process has been slow.
NYSE Euronext, created in 2007 after the combination of NYSE Group and Euronext N.V., is the world’s most liquid equities exchange group and home to some of the world’s biggest companies.