* Circuit breakers pilot expires Dec. 10
* Regulator wants replacement "limit up/limit down" plan
* Permanent fix for May 6-like market drops sought
(Adds background on trading curbs, byline)
By Rachelle Younglai and Jonathan Spicer
WASHINGTON/NEW YORK, Dec 2 U.S. regulators are
considering a three-month extension to their pilot program that
gives stocks a reprieve when they are in freefall, people familiar
with the situation said on Thursday.
The Securities and Exchange Commission's circuit breaker
program expires Dec. 10 and the regulator is under pressure to
find permanent solutions to bolster market integrity after the May
The circuit breakers pause trading in a company's stock when
it is dropping precipitously. The SEC is now trying to craft
measures known as "limit up/limit down" that would slow, not stop,
trading when markets fall.
But the SEC has been deluged with work since the passage of
the Dodd-Frank legislation in July, delaying fixes for the
fragmented and high-speed U.S. equity markets. [ID:nN30293234]
Now the SEC is considering extending its circuit breaker
program by at least three months to give the exchanges time to
implement new measures, said the sources, who were not authorized
to speak to the press.
Some $1 trillion of paper value was temporarily wiped out in
the surprise May 6 "flash crash," which rattled investors and
called into question the basic structure of the mostly electronic
The stock-specific circuit breakers were adopted in June as
the main response to the unprecedented crash.
They stop trading for five minutes when a stock moves more
than 10 percent in five minutes. These new circuit breakers are in
addition to older index-based breakers that did not trip on May
(Reporting by Rachelle Younglai and Jonathan Spicer)