Huddled in a room last week, SEC Chairman Mary Schapiro met with the leaders of the six exchanges to get to the bottom of what caused unusual trading activity and enormous stock market selloff on May 6.
"As a first step, the parties agreed on a structural framework, to be refined over the next day, for strengthening circuit breakers and handling erroneous trades," Schapiro said after meeting with the New York Stock Exchange, NASDAQ, BATS Exchange Inc., Direct Edge, International Securities Exchange Inc. and Chicago Board Options Exchange as well as the Financial Industry Regulatory Authority.
On May 6, the Dow Jones Industrial Average dropped 9.2%, which was considered to be the steepest fall since the market crash of 1987. As a result, nearly $700 billion was wiped out from equity markets over the course of a few minutes leading to panicked sell of orders.
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