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NYSE Arca Rules Partly Responsible for August ETF Rout, SEC Says

  • Agency's report says price bands slowed ETFs from rebounding
  • Exchange safeguards put in place to help prevent flash crashes

A bout of market mayhem that halted trading in hundreds of exchange-traded funds in August was exacerbated by stock exchange rules intended to limit extreme price movements, according to a U.S. regulator’s report released Tuesday.

The Securities and Exchange Commission’s analysis of the events on Aug. 24 said price bands imposed by exchange NYSE Arca restricted how quickly ETFs could rebound after steep price declines triggered halts. Arca’s narrow bands, which it has since proposed to widen, may have spurred more delays by limiting faster price adjustments, the regulator’s report said.