U.S. stock exchanges aim to extend a system of cushions against rapid price swings until the end of July, while regulators and market operators develop a more sophisticated replacement.

So-called "circuit breakers" that temporarily halt trade in overheated securities would remain in effect on a pilot basis until July 31, under exchange proposals filed with the Securities and Exchange Commission. The pilot program previously was slated to end on Jan. 31.

The circuit breaker regime was devised in the weeks following the "flash crash" of May 6, 2010, when the U.S. stock market rapidly plunged by about 700 points amid a crush of selling, data slowdowns and a large, bearish trade in stock-index futures. The episode spurred debate around the fragmented nature of electronic markets and highlighted the role of high-frequency trading firms, after several of the largest participants ceased trading during the chaos.

NYSE Euronext (NYX), Nasdaq OMX Group Inc. (NDAQ), BATS Global Markets and Direct Edge in recent days have filed proposals for a joint extension of the existing circuit breakers, which halt buying and selling if a stock's price moves too far within a five-minute period.

Regulators meanwhile are weighing a new system of price limits that would curb trading--but not stop it altogether--if a security's price abruptly rises or falls. That proposal is now being considered alongside a plan by exchanges to tighten up a circuit breaker for the entire stock market that would bring business to a stop in the event of a sudden plunge or rise in a major U.S. stock index.

Such a market-wide circuit breaker already exists, but remained out of reach even at the peak of the flash crash.

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