Circuit BreakersAfter the 1987 stock market crash, the New York Stock Exchange established circuit breakers to help reduce volatility during a market downturn. If the Dow Jones Industrial Average (DJIA) experiences a substantial single-day decline, the circuit breakers pause trading for a specified time period or close the market for the rest of the day.
Historical LevelsWhen they were first implemented, a 250-point drop halted trading for one hour, and a 400-point drop halted trading for two hours.
From February 1997 to April 1998, a 350-point drop would halt trading for 30 minutes, and if this circuit breaker were triggered in the last 30 minutes of the session, the market would close for the day. A 550-point drop would cause the market to close for 1 hour or for the rest of the day if it were triggered within the last hour of trading.
Over the past ten years, circuit breakers have only been triggered once. On October 27, 1997, the DJIA fell 350 points at 2:35 p.m. ET and 550 points at 3:30 p.m. ET. Due to the timing of the declines, the market closed for the rest of the day.
Current LevelsNew standards were established in April 1998 to reflect the growth of the market over the past 10 years. The circuit breakers are reset quarterly at 10%, 20%, and 30% of the DJIA average closing values of the previous month, rounded to the nearest 50 points. These values are updated on January 1, April 1, July 1, and October 1.
The following chart summarizes the current levels as of April 1, 2013. (Note: All times listed below are Eastern.)
10% Decline (1,450 points)
Before 2 p.m. trading will halt for one hour.
Between 2 p.m. and 2:30 p.m. trading will halt for 30 minutes.
After 2:30 p.m. trading will continue through the close of the market.
20% Decline (2,900 points)
Before 1 p.m. trading will halt for two hours.
Between 1 p.m. and 2 p.m. trading will halt for one hour.
After 2 p.m. the market will close for the rest of the day.
30% Decline (4,350 points)
Trading will halt for the remainder of the day, regardless of the time.