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They are means of automatically, if temporarily, halting the trading race if it gets out of hand – a multilateral disarmament device. Following the Flash Crash, the US authorities altered circuit-breaking rules so that they applied on an across-exchange basis to prevent stress simply migrating between exchanges. It would be useful if the revised trading proposals in Europe under MiFID II contained similar provisions. Finally, safety races by bank investors are being explored by financial regulators. Over the past six months, the FPC has paid increasing attention to the systemic risk posed by rising levels of bank encumbrance. The FSA recently undertook a survey of UK banks’ level of encumbrance which the FPC will consider later this year.33 The issue is also being looked at internationally. There are a variety of policy options to forestall self-fulfilling safety races. One would be greater transparency about levels of encumbrance. Lack of transparency creates an uncertainty premium in unsecured borrowing rates, encourages further secured financing and thereby speeds up the seniority race. Reducing that premium through greater transparency would tend to slow the race, if not stall it. An option for stalling the race would be to place maximum limits on levels of bank asset encumbrance. These would be similar in principle to prudential limits on bank leverage and large exposures. ************ Systems, both social and natural, are characterised by a survival of the fittest. But for both, that competitive race can at times generate unhealthy outcomes for the system as a whole.