NYSE Circuit Breakers

Just in case you were wondering: NYSE Circuit Breakers These restrictions are also known as “Rule 80B.” The first version of this rule, adopted in 1988, set triggers at 250 DJIA points and 400 DJIA points. These restrictions are updated quarterly to reflect the heights to which the Dow Jones Industrial Average has climbed. 10% decline (950 points for 3Q02) The first circuit breaker is triggered if the DJIA declines by approximately 10%. The restrictions that are put into place – if any – depend on the time of day when the circuit breaker is triggered. If the trigger occurs before 2pm Eastern time, trading is halted for 1 hour. If the trigger occurs between 2 and 2:30pm Eastern, trading is halted for 30 minutes. If the trigger occurs after 2:30pm Eastern time, no restrictions are put into place. (This restriction was first used during the afternoon of 27 Oct 97.) Note that there is no similar restriction to the upside; nothing is done if the Dow rallies 10%. 20% decline (1900 DJIA points for 3Q02) The second circuit breaker is triggered if the DJIA declines by approximately 20%. The restrictions that are put into place again depend on the time of day when the circuit breaker is triggered. If the trigger occurs before 1pm Eastern time, trading is halted for 2 hours. If the trigger occurs between 1 and 2pm Eastern, trading is halted for 1 hour. If the trigger occurs after 2pm Eastern time, the NYSE ends trading for the day. Again there is no similar restriction to the upside; nothing is done if the Dow rallies 20%. 30% decline (2850 DJIA points for 3Q02) The third circuit breaker is triggered if the DJIA declines by approximately 30%. The restriction is very simple: the NYSE closes early that day. And like the other cases, again no restrictions are imposed if the Dow rallies 30%. The circuit breakers cut off the automated program trading initiated by the big brokerage houses. The big boys have their computers directly connected to the trading floor on the stock exchanges, and hence can program their computers to place direct huge buy/sell orders that are executed in a blink. This automated connection allows them to short-cut the individual investors who must go thru the brokers and the specialists on the stock exchange.

well lets hope we never see DJIA dropping 30%!!! In 1987, it dropped about 22% (as I recall) in one day.

Thanks. Was just about to Google this.