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New circuit breakers set
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April 10, 1998: 2:54 p.m. ET
SEC approves percentage trading halts as of April 15 for one-day Dow declines
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NEW YORK (CNNfn) - The Securities and Exchange Commission Friday announced new circuit breaker trigger levels for one-day declines of 10, 20 and 30 percent in the Dow Jones industrial average.
The new levels, which take effect April 15, were proposed by the securities exchanges and the National Association of Securities Dealers. Both pushed for new rules governing cross-market trading halts during periods of extraordinary market volatility.
Changes to the circuit breakers were approved by the New York Stock Exchange's board of directors in early February.
The percentage levels will be converted into point values at the beginning of each calendar quarter, using the average closing value of the Dow for the previous month.
The SEC said the revised levels were designed to be triggered only during a severe one-day decline "of historic proportions" which was the original intent of circuit breakers.
Under the new rules, a 10 percent decline will halt trading for one hour if triggered before 2 p.m. Eastern time. At or after 2 p.m. but before 2:30 p.m., trading will stop for 30 minutes. At or after 2:30, the market will not stop for a 10 percent drop.
Trading will stop for two hours when a 20 percent decline occurs before 1 p.m. Between 1 and 1:59 p.m., the halt will be for one hour. If the Dow drops 20 percent at or after 2 p.m., trading will stop for the day.
A 30 percent drop will halt trading for the day, regardless of when it occurs.
Previously, trading was halted for 30 minutes if the Dow fell 350 points or one hour if it fell 550 points from the previous day's close.
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