The U.S. Securities and Exchange Commission (SEC) announced on Friday that it had approved two proposals designed to deal with extraordinary volatility in individual securities and the broader stock market.

One initiative, proposed by the national securities exchanges and the Financial Industry Regulatory Authority (FINRA), is going to establish a "limit up-limit down" mechanism, the agency said in a statement.

The new mechanism aims to prevent trades in individual listed equity securities from occurring outside of a specified price band, which would be set at a percentage level above and below the average price of the security over the immediately preceding five- minute period. When implemented, it will replace the existing single-stock circuit breakers that the SEC approved on a pilot basis after the market events of May 6, 2010.

In addition, the existing market-wide circuit breakers that, when triggered, halt trading in all exchange-listed securities throughout the U.S. markets will be updated.

The revised rule will reduce the market decline percentage thresholds needed to trigger a circuit breaker to 7, 13 and 20 percent from the prior day's closing price, rather than 10, 20, and 30 percent.

Under the new plan, the duration of trading halts that do not close the market for the day will be also shortened to 15 minutes, from 30, 60, or 120 minutes.

The exchanges and FINRA are scheduled to implement these changes by Feb. 4, 2013. Meanwhile, the SEC approved both proposals for a one-year pilot period.

On May 6, 2010, the U.S. stock market suffered a "flash crash," in which the Dow Jones industrial average plunged about 1,000 points, or about nine percent, only to recover those losses within minutes.