NYSE Sets Circuit Breakers
NEW YORK (AP) _ Traders returning to the floor of the New York Stock Exchange Monday will have a new set of circuit-breaker and trading-collar trigger levels, effective throughout the first quarter of 2000.
Circuit-breakers suspend trading for declines in the Dow Jones industrial average of 10 percent, 20 percent and 30 percent. As the Dow has escalated sharply since the circuit breakers were first implemented in April 1998, the circuit-breaker levels have risen as well.
Beginning Monday, a 1,100-point drop in the Dow before 2 p.m. will halt trading for one hour; for 30 minutes if the drop occurs between 2 p.m. and 2:30 p.m.; and will have no effect if at 2:30 p.m. or later. In the fourth quarter of 1999, a drop of 1,060 was necessary before trading was halted.
A 2,250-point drop in the Dow before 1 p.m. will halt trading for two hours; for one hour if between 1 p.m. and 2 p.m.; and for the remainder of the day if at 2 p.m. or later. In the fourth quarter, the level was set at 2,150.
A 3,350-point drop will halt trading for the remainder of the day regardless of when the decline occurs. That’s up from 3,200 in the fourth quarter.
The NYSE also imposes trading collars, which restrict some computer-driven trading. Those will be triggered when the Dow moves 220 points or more above or below its closing value on the previous trading day and removed when the Dow is above or below the prior day’s close by 110 points.
When circuit breakers were first imposed following the market crash of October 1997, trading was suspended for a half-hour if the Dow dropped 350 points and for one hour if the index fell 550 points.
Under the old rules, the market would close for the day if the 350 level was reached at 3:30 p.m. or if the 550 level was hit at 3 p.m.