Circuit-Breaker Levels
The New York Stock Exchange resets its "trigger levels" each quarter to halt trading in the event of intraday DJIA declines of 10%, 20% or 30%. The triggers are converted into point values at the beginning of each calendar quarter by using the average closing value of the DJIA for the prior month (average closing value of DJIA in June, 2007 was 13,500). The point values of the declines are rounded to the nearest 50 points.
The duration of the trading halts are then determined by the time of day and extent of the decline. Trading in all stocks on the exchange will halt for the time periods specified below (all times are eastern):
Level 1 Halt
In the event of a 1,350-point decline in the DJIA (10%),
Before 2:00 p.m. Trading halts for one (1) hour
Between 2:00 p.m. and 2:30 p.m. Trading halts for 30 minutes
After 2:30 p.m. No trading halt
Level 2 Halt
In the event of a 2,700-point decline in the DJIA (20%),
Before 1:00 p.m. Trading halts for two (2) hours
Between 1:00 p.m. and 2:00 p.m. Trading halts for one (1) hour
After 2:00 p.m. MARKET CLOSES for remainder of session
Level 3 Halt
In the event of a 4,050-point decline in the DJIA (30%),
Regardless of time of day MARKET CLOSES for remainder of session
Program Trading Collar Levels for Third-Quarter 2007
The NYSE also has circuit breakers, called "program trading collars", that limit index arbitrage trading. These collars are used to reduce market volatility and promote investor confidence. NOTE: Effective Oct. 1, 2005, the NYSE Composite Index (ILX symbol .NYA) was adopted to calculate limitations on index arbitrage trading and no longer uses the DJIA to calculate these limits.
In the third-quarter 2007, trading collars will be implemented as follows:
- A decline in the NYA of 190 points or more will require all index-arbitrage sell orders of the S&P 500 stocks to be stabilizing, or sell plus, for the remainder of the day, unless on the same trading day, the NYA advances 90 points or less below its previous day's close.
- An advance in the NYA of 190 points or more will require all index-arbitrage buy orders of the S&P 500 stocks to be stabilizing, or buy minus, for the remainder of the day, unless the NYA retreats to 90 points or less above its previous day's close.
- The restrictions will be re-imposed each time the NYA advances or declines 190 points from its previous day's close.
Rule 80A – In effect each day for any component stock of the S&P 500 Composite, whenever the NYSE Composite advances or declines by an amount greater than or equal to 2% from the prior day's close. The restrictions are removed when the NYSE Composite increases or decreases to 1% or less, calculated pursuant to the rule, from the prior day's close.
If removed, the index arbitrage order entry restrictions will be re-imposed each time the NYSE Composite advances or declines by an amount greater than or equal to 2% from the prior day's close.
For instance, if the NYSE Composite (.NYA) closed at 10,200 the previous day, collars would be implemented with a move up or down by 204 points. For collars to be removed the index would have to move inversely 102 points.
Market Analysis Department
Sources: NYSE.com, Wall St. Journal and Dow Jones
(bold emphasis mine)
The only curbs in place so far would effect program trading. The Dow is a LONG way from 10% down.
You may now continue to irrationally panic