Stock exchanges attempt to ease panic selling by taking certain steps to halt trading. These moves are called market circuit breakers—or collars. Under extreme conditions that could trigger market disruptions, exchanges can invoke Rule 48 to make it easier and faster to open stocks.

Trading curb - Wikipedia

A market decline that triggers a Level 1 or Level 2 circuit breaker before 3: The markets instituted circuit breakers in the wake of 's "Black Monday. This was the largest one-day percentage drop in history until that time.

Until , the markets used a point drop rule—that is, looking at how many points the markets declined, rather than the percentage of the move, to trigger circuit breakers to stop trading. Get the latest on the markets.

Unlike a circuit breaker that stops stock trading, the Securities and Exchange Commission's Rule 48 makes it easier and faster to open the stock markets — when there are fears that the market could open with a lot of volatility that would disrupt trading. Where circuit breakers and Rule 48 may be related is the the rule could be used the day after a circuit breaker has been enforced.

Rule 48 speeds up the opening by suspending the requirement that stock prices be announced at the market open. Those prices have to be approved by stock market floor managers before trading actually begins. Without that approval, stock trading can begin sooner. To invoke Rule 48, an exchange would have to determine that certain conditions exist that would cause market disruptions. Rule 48 was approved by the SEC in December of It's been invoked twice: In , the stock markets were subject to great volatility over fears of a global recession and in , the European debt crisis caused panic buying and selling.

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The Stock Market Is Not The Economy | FiveThirtyEight

CNBC Explains Zack Guzman Mark Koba. What are market circuit breakers? Friday, 8 Jan 4: When do market circuit breakers kick in?

When were market circuit breakers first conceived? Circuit breakers were first used in October , following a major stock market drop.

Stock Market Turmoil: Dow Jones Jumps and Dives in Day of Turbulence - NBC News

What is Rule 48? Mark Koba Senior Editor, CNBC.

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