Faster Triggers for Circuit Breakers Proposed
October 3, 2011
The nation's stock exchanges and the Financial Industry Regulatory Authority are filing proposals that will trigger halts in trading, marketwide, more quickly, the Securities and Exchange Commission said. The changes are proposed for marketwide "circuit breakers," which key off drops in the Dow Jones Industrial Average.
The revisions, which among other things cut down the size of the drop that would trigger a circuit breaker by a third, are designed to address extraordinary volatility across the securities markets.
On May 6, 2010, the Dow dropped roughly 600 points in five minutes before snapping back. In the first full week of August, the nation's stocks moved up or down more than 400 points for four days in a row, a first.
When triggered, these circuit breakers halt trading in all exchange-listed securities throughout the U.S. markets.
The new rules would include:
* Reducing the market decline percentage thresholds necessary to trigger a circuit breaker from 10%, 20% and 30% to 7%, 13% and 20% from the prior day's closing price.
* Shortening the duration of the resulting trading halts that do not close the market for the day from 30, 60, or 120 minutes to 15 minutes.
* Simplifying the structure of the circuit breakers so that rather than six there are only two relevant trigger time periods-those that occur before 3:25 p.m. and those that occur on or after 3:25 p.m.
* Using the broader S&P 500 Index as the pricing reference to measure a market decline, rather than the Dow. Also, the trigger thresholds would be recalculated daily rather than quarterly.
Northern Trust Launches FlexShares ETF Family
Northern Trust has launched a new family of exchange-traded funds called FlexShares. The four funds, which are trading on the New York Stock Exchange, are based on indexes created and maintained by Morningstar and Markit.
The new offerings are the FlexShares Morningstar Global Upstream Natural Resources Index, FlexShares Morningstar U.S. Market Factor Tilt Index, FlexShares iBoxx 3-Year Target Duration TIPS Index and FlexShares iToxx 5-Year Target Duration TIPS Index funds.
"FlexShares represent Northern Trust's global expertise in asset management, investment solutions and risk management," said Shundrawn Thomas, head of the ETF group at Northern Trust.
John Hancock Extends 'Who Knew' Ad Campaign
Positive results from its "Who Knew" advertising campaign have prompted John Hancock Mutual Funds to extend the campaign through the end of the year-with ads on TV, online and in print, including in sister publication Financial Planning. The campaign showcases John Hancock's four- and five-star mutual funds, as rated by Morningstar, and points out that while the company has long been known for its insurance and annuities, it is also a major asset management firm. Since launching in February, calls from financial advisers to John Hancock have risen 188%.