NEW YORK -- For investors upset by the stock market's dizzying slump of the past month, here's some consolation: If it weren't for new restrictions on computer-driven trading, it might well have been worse.

In an effort to restore the confidence of small investors, the New York Stock Exchange last month launched its most ambitious effort yet to curb wild swings in stock prices by reining in some free-wheeling trading practices of Wall Street's big institutional investment houses.

Acting on the recommendation of a blue-ribbon panel, the exchange has barred certain kinds of large-scale, programmed buying and selling of shares whenever the Dow Jones industrial average rises or falls by more than 50 points in a single session.

The restriction, called "the collar" or circuit breaker, was triggered 11 times last month during the volatile trading that followed Iraq's invasion of Kuwait. In nearly all of those cases, the spiraling market quickly slowed its pace, although it is obviously impossible to say how the market might have responded were it not for the collar.

Supporters of the measure argue that it helped prevent a panicky one-day sell-off similar to the Black Monday crash in October 1987, or the "mini-crash" two years later. "It {the collar} probably did interrupt some of the declines. I think it's good," said Laszlo Birinyi of Birinyi Associates, a New York financial consulting firm that monitors computer-driven trading.

NYSE spokeswoman Sharon Gamsin said the collar "seems to be working very well. The feedback that we were getting from the trading community is that the rule is having the effect of tempering the volatility in the market."

The new rule has not drawn universal praise, however. Critics argue that such artificial measures raise the cost of trading by making the markets slower and less efficient. Already, they note, the collar has led some big institutional investors to shift some trading off the NYSE to the over-the-counter market and other private arenas.

J. Thomas Allen, president of Advanced Investment Management Inc., a Pittsburgh-based firm that manages more than $1 billion for big investors, disputes the contention that the new rule helps prop up the market. "That's kind of like saying, 'If we slow everything down, it'll keep things from dropping.' If that were really the case, we ought to be able to do all our trade tickets on stone tablets, and nothing would ever go down," Allen said.

The collar is aimed at a widely used, complicated trading strategy called index arbitrage. In that practice, big investors seek to profit from small discrepancies between the prices of a futures contract for a stock index and those of the actual stocks that together make up the index. In a typical index arbitrage operation, a big investor will buy the futures contract for the Standard & Poor's 500 index, while simultaneously selling shares in all 500 stocks that the index comprises.

When the collar is in effect, such as when the Dow average has dropped by 50 points, a big investor seeking to implement a program to sell S&P 500 shares can actually unload only after that particular stock has risen in price, or after an "uptick." (The collar is also known as "the uptick rule.")

That rule is designed to prevent index arbitrage from becoming a self-perpetuating process, in which it pushes down stock prices, which makes it attractive to make the same program trade again, which further depresses the prices, and so forth. Such a self-driven, downward spiral was blamed for the intensity of the market's downfall on Black Monday.

Of course, the collar can also work the other way and prevent index arbitrage from propelling the market up. That has happened in two of the 11 instances the rule has taken effect. While such a result may seem self-defeating, Gamsin said, "Markets going up very quickly can come back down equally quickly. It's violent movements that concern investors."