December 30, 2015 / 2:23 AM / in 3 years

SEC releases report on Aug. 24 stock market volatility

The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

NEW YORK (Reuters) - U.S. regulators on Tuesday released a research report on the extreme volatility that roiled the stock market on Aug. 24 when panic over the health of the Chinese economy spurred a record intraday drop in the Dow Jones Industrial Average.

The U.S. Securities and Exchange Commission said the 88-page report, which was based on public data, could be used to help assess the operation of the stock market under stressed conditions, but that it was not meant to suggest the causes of the volatility on Aug. 24, or potential steps to address it.

There were 1,278 trading halts triggered due to extraordinary volatility in a broad swath of 471 securities. Exchange-traded funds (ETFs) were hit disproportionately, as were the stocks of companies that had market capitalizations of more than $100 million, the SEC said.

The sporadic and rapid-fire halts led to confusion among some investors as to what was trading and questions about whether they received fair prices for trades they completed.

The paper, written by SEC staff, looked at issues such as the lack of a uniform approach among exchanges to open trading, including after stocks have been temporarily halted, how trading pauses are triggered in volatile conditions, and how exchange-traded products, like ETFs, are affected by volatility.

The SEC said it would continue to look into those issues and others related to how the market functioned on Aug. 24. Exchanges, including those run by Intercontinental Exchange Inc, Nasdaq Inc and BATS Global Markets, have said they are looking for ways to prevent a repeat of the market turmoil.

Reporting by John McCrank; Editing by Leslie Adler

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