SEC OFFICIAL PROPOSES EQUITY, FUTURES TRADE HALT
Securities and commodity
exchanges should consider establishing a mechanism for halting
trading of equities, futures and options when there is unusual
price volatility, a top Securities and exchange, SEC, official
said.
    Richard Ketchum, director of the SEC's division of market
regulation, said a "short, system-wide halt" of trading of
stocks, futures contracts and options on futures contracts
would "let everyone get a breath" in especially volatile
markets.
    Ketchum made his remarks in connection with a Futures
Industry Association panel discussion on stock index futures
and stock market volatility.
    The SEC official did not attempt to define "volatile"
markets.
    Commodity Futures Trading Commission Chairman Susan
Phillips later told reporters that exchanges already have the
authority to halt trading if an emergency is declared.
    But she said Ketchum's proposal was "something to look at"
and that she expected the exchanges to explore procedures for
making order imbalances public.
    William Brodsky, president of the Chicago Mercantile
Exchange, CME, told Reuters that considering Ketchum's proposal
would be a "worthwhile exercise," but that implementation of a
trading halt mechanism posed "major, philosophical, economic
questions."
    Ketchum said price limits on contracts "are not
particularly useful in dealing with volatility."
    Earlier, Brodsky announced the CME board of directors had
decided last Tuesday to drop a plan to set a 12-point limit on
the daily price movement of its Standard & Poor's 500 contract.
 Reuter
