In an effort to further dampen market volatility, the Investment Industry Regulatory Organization of Canada (IIROC) is proposing guidance that would expand its use to single-stock circuit breakers, which impose regulatory halts on individual stocks amid extreme price moves.

IIROC is proposing guidance that would expand the list of securities covered by single-stock circuit breakers (SSCBs) to include all securities that are considered “actively traded”. It would also extend the application of SSCBs to the entire trading day; allow more than one SSCB to trigger for a particular security during the same trading day; and, develop a report on the securities subject to SSCBs.

In the proposed guidance, which was issued for comment today, IIROC says that it believes that SSCBs are an effective tool to help maintain fair and orderly markets in situations where a security experiences a rapid and unexplained price movement.

“In IIROC’s view, it is appropriate to expand the securities covered to include those that are actively-traded, and to increase the time when SSCBs are active to include the periods post-open and pre-close to address significant and unexplained price movements that may occur during these times,” it says.

The most significant impact of the proposed guidance, IIROC suggests, would be the effort required by IIROC to modify its systems to accommodate the proposed changes to the SSCB program, including the preparation and publication of a report that identifies all securities subject to SSCBs at that time (which would be updated monthly).

Additionally, firms that have designed controls that take into account the price movements required to trigger a SSCB may be required to modify their processes and controls to align with the information contained in the report. And, the TSX and TSX Venture exchanges would have to modify their systems to allow market-on-close orders to execute while a regulatory halt is in place.

“We are committed to maintaining fair and orderly markets and the expansion of single-stock circuit breakers, together with other complementary measures, enhances market integrity and fosters investor confidence,” said Susan Wolburgh Jenah, IIROC’s president and CEO.

IIROC notes that the proposed expansion of SSCBs is just the latest in a series of reforms implemented in response to the so-called “flash crash” in May 2010.

The proposal is out for comment until March 10, 2014.