The US Securities and Exchange Commission has said it is “closely monitoring” instances of extreme stock market volatility and will act to “protect retail investors”, following a boom in online trading for heavily-shorted stocks such as GameStop.

Acting chair Allison Herren Lee and commissioners Hester Peirce, Elad Roisman and Caroline Crenshaw said in a 29 January statement that the price volatility demonstrated in the last few days “has the potential to expose investors to rapid and severe losses and undermine market confidence”.