The U.S. securities regulator is considering a plan that would improve a 23-year-old circuit breaker that did not trip during last year's flash crash to make it more sensitive to extreme market moves.

Exchanges pitched a long-awaited plan that would lower percentage thresholds for halting stock trading, shorten the halts and change the reference index to the broader Standard & Poor's 500 from the current Dow Jones industrial average, the U.S. Securities and Exchange Commission said on Tuesday.

The government regulator could formally adopt the changes after a 21-day public comment period.

The new breakers, designed to pause trading in all exchange-listed securities throughout U.S. markets, are the latest in a long line of responses to the May 6, 2010, crash, which revealed deep flaws in market structure, spooked investors and embarrassed exchanges and regulators.

The market-wide breakers, adopted in 1988, did not stop the nearly 700-point crash in the Dow because their trigger thresholds were so broad. While futures exchanges quickly shut things down that day, stock-trading at the Nasdaq and elsewhere spiraled downward in a jarring few minutes.

Nasdaq OMX Group Inc, NYSE Euronext and other exchange operators, as well as the Financial Industry Regulatory Authority, proposed tightening the thresholds to 7, 13 and 20 percent lower than the previous day's close, from the current 10, 20 and 30 percent, the SEC said.

The breakers would be based on only two time periods -- before and after 3:25 p.m. Eastern time -- rather than six, under the plan. Trading would halt for 15 minutes, instead of a patchwork of 30, 60 or 120 minutes.

This new market-wide circuit breaker together with the other post-flash crash measures is designed to reduce extraordinary volatility in our markets, SEC Chairman Mary Schapiro said in a statement.

Shortly after the crash, the SEC adopted new stock-based circuit breakers that stop trading for five minutes in stocks that move more than 10 percent in five minutes.

The new market-wide breakers are meant to work in tandem with the stock-based ones, the SEC said. There are also plans to adopt a limit up-limit down plan that would set moving price floors and ceilings for stocks without stopping trading outright.

Shifting to the S&P 500, which is based on 500 large-cap companies, rather than the Dow, based on 30 blue-chips, would make the market-wide breakers more reflective to movements in the overall market at a time that volatility is high.

(Reporting by Jonathan Spicer; editing by Maureen Bavdek, Gerald E. McCormick and Andre Grenon)