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The Securities and Exchange Commission has approved a massive expansion of safeguards aimed at preventing another "flash crash," allowing exchanges to implement a circuit-breaker for every U.S. stock.

U.S. stock exchanges intend to implement temporary trading halts for rapidly moving securities not already covered in the regime of so-called "circuit breakers" put in place a year ago to ward off the dramatic price swings of the May 6, 2010, "flash crash."

Exchanges and regulators currently are developing a new and more flexible system of "limits" geared to replace the circuit breakers, but broadening the existing plan will afford protection to more stocks while the new scheme is finalized.

The circuit breaker function briefly pauses trading in a particular stock or exchange-traded fund if its price rises or falls by 10% or more within a five-minute period. Currently covered by the pilot program are stocks in the Standard & Poor's 500 and Russell 1000 stock indexes, as well as 344 of the most heavily traded ETFs.

The expansion, approved Thursday according to a notice from the SEC, encompasses all securities listed on U.S. trading venues but will allow for wider price swings before halting lower-priced or thinly-traded shares that typically are more volatile.

Under the plan, stocks and exchange-traded funds priced at or above $1 would be halted after a move of 30% or more in a five-minute period. Securities priced below $1 would trigger a halt after rising or falling by 50% or more in a five-minute period.

The multiple tiers are "reasonable" and intended "to reflect their general higher volatility, lower liquidity, and other trading characteristics," regulators wrote in a notice.

-By Jacob Bunge, Dow Jones Newswires; 312-750-4117; jacob.bunge@dowjones.com

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