U.S. regulators will most likely find that a confluence of events caused the unprecedented stock market flash crash in early May, Securities and Exchange Commission Chairman Mary Schapiro said on Thursday.

I suspect what we will find was it was a confluence of a number of events. But we have got to keep plowing through the data so we can be sure, Schapiro said in an interview on the sidelines of a conference in Montreal.

For a month, regulators have been trying to determine what caused the Dow Jones industrial average to plunge some 700 points in minutes on May 6 before sharply rebounding.

Earlier on Thursday, the SEC approved a mechanism to temporarily pause trading in single stocks when markets are plunging uncontrollably. The stock-specific circuit breakers, being adopted this month, will halt trading for five minutes in any S&P 500 share if it falls more than 10 percent in five minutes.

Schapiro said she was anxious to expand the stock-specific mechanism to other stocks and to a number of exchange-traded funds, which were hit harder than ordinary stocks in the brief market freefall.

Schapiro said she hopes to update the current market-wide circuit breaker before the end of the year. It was not triggered May 6.

CREDIT RATING AGENCY PERFORMANCE ABYSMAL

Schapiro's comments come as U.S. lawmakers met on Thursday to start hashing out final legislation to revamp financial regulation. Lawmakers will have to make decisions on a slew of controversial proposals designed to avoid a repeat of the 2008 credit crisis that wreaked havoc around the world and shattered investor confidence.

Among the proposals is one designed to get rid of some of the conflicts of interests at credit rating agencies like Standard & Poor's, which is paid by the issuer whose debt it rates. The Senate proposal would create a credit rating agency board so that a third party could choose which rating agency would rate an issuer's debt.

The credit rating agencies performed abysmally, Schapiro said. The SEC has been trying to increase competition in the industry dominated by Standard & Poor's, Moody's Corp and Fitch Ratings.

The SEC has adopted a number of rules to improve disclosures and prevent issuers from shopping for the most favorable rating. But it has not been able to find a solution for the conflicts of interests inherent in the issuer-paid model.

We have tried to do lots of things to try to get at conflicts of interest, but we still have in many ways a fundamentally flawed business model, Schapiro said. I appreciate the effort to try and break that tie.

Another controversial plan being considered by U.S. lawmakers is one that would force banks to choose between their lucrative over-the-counter derivatives desks and access to federal protections.

Schapiro did not take a position on the Senate proposal and said it did not matter whether the swaps desks were in or out of the banks as long as regulators had the tools to fully and comprehensively regulate the swaps desks.

Schapiro also said she hoped to soon adopt rules to make it easier and cheaper for shareholders to nominate corporate board directors.

Schapiro was at a meeting of the International Organization of Securities Commissions (IOSCO).

(Reporting by Rachelle Younglai; Editing by Leslie Adler, Gary Hill)