The U.S. equity, options and futures exchanges have established procedures for coordinated cross-market trading halts in the event of a severe market price decline. These procedures, known as market wide circuit breakers, may halt trading temporarily or, under extreme circ*mstances, close the markets before the normal close of the trading session.
The SEC recently approved a joint exchange plan to modify the market wide circuit breaker rules in the following manner:
- Reduce the market decline percentage thresholds needed to trigger a circuit breaker to 7%, 13% and 20% from the prior day's closing price, rather than declines of 10, 20 or 30 percent.
- Simplify the market circuit breaker rules by reducing the number of relevant trigger time periods and trading halt durations.
- Use the broader S&P 500 Index (rather than the Dow Jones Industrial Average) as the pricing reference to measure a market decline and require that the trigger thresholds be recalculated daily (rather than quarterly).
The revised Market Wide Circuit Breaker rule 2013 was implemented Monday, April 8, 2013. For messaging details, refer to the approval order on the SEC website.
Market Wide Circuit Breaker Trigger Points
| Trigger Value | S&P 500 Index Breach Thresholds for Today | TIME | ACTION |
|---|---|---|---|
| MWCB Level 1: (7% decline) | 4445.62 | Before 3:25 p.m. At or after 3:25 p.m. | Halt 15 minutes. Trading continues, unless there is a Level 3 |
| MWCB Level 2: (13% Decline) | 4158.8 | Before 3:25 p.m.. At or after 3:25 p.m. | Halt 15 minutes. Trading continues, unless there is a Level 3 |
| MWCB Level 3: (20% Decline) | 3824.19 | Any time | Halt remainder of Day |
