Canadian regulators are following their U.S. counterparts by introducing single-stock circuit breakers in response to the “flash crash” of 2010.

The Investment Industry Regulatory Organization of Canada Thursday announced that it has implemented single-stock circuit breakers, which will generate a five-minute trading halt across all Canadian marketplaces if the price of the security swings 10% or more within a five-minute period. The new mechanism is designed to help prevent rapid, significant price moves in stocks that may indicate a disorderly market.

In an accompanying guidance note, IIROC indicates that the new circuit breakers would represent another level of controls designed to ensure fair and orderly markets. The first set of controls is currently at the dealer level, the second set is the controls in place at the marketplace level, the new single-stock circuit breakers would form the third level, followed by market-wide circuit breakers.

Initially, the new circuit breakers will initially apply to all securities included in the S&P/TSX composite ondex, and exchange-traded funds that are comprised principally of listed securities. All trades executed at more than 5% beyond the price that triggered the circuit breaker will be cancelled.

“Single-stock circuit breakers will be an important tool to help mitigate volatility in the trading of individual stocks,” said Susan Wolburgh Jenah, president and CEO of IIROC. “Together with other complementary IIROC initiatives, this tool is an important ingredient in building investor confidence and enhancing market integrity.”

In addition to the single-stock circuit breakers, IIROC has issued guidance on the use of certain order types; is reviewing and clarifying policies on dealing with erroneous and unreasonable trades; it is contemplating changes to the existing market-wide circuit breakers; and, it’s having ongoing discussions on the harmonization of volatility controls among marketplaces.

Since they introduced the single-stock circuit breakers, U.S. regulators have proposed replacing them with a new “limit up-limit down” mechanism, which would require trades in listed stocks to be executed within a range tied to recent prices for the security. However, they have yet to adopt that proposal.