Reminder: Circuit Breaker Rule NOT Live Yet
Proposed single-stock circuit breakers are not in effect.
I have been asked if the single-stock circuit breaker rules that were recently proposed by the SEC are in effect. The answer is no. The SEC stated that there would be a 10-day public commentary period on the new rules once they are published; after that the SEC will decide when they come into effect, or whether they should be modified.
The rules have not yet been published in the Federal Register, so the 10-day comment period has not even started.
The proposed single-stock circuit breaker would pause trading in an individual stock in the S&P 500 if the stock dropped 10 percent in a 5-minute period.
What is in effect are the old macro circuit breakers, which calls for trading halts if the Dow Industrials drop 10, 20, or 30 percent, depending on the time of day.
Also in effect are the NYSE individual stock circuit breakers (liquidity replenishment points, or LRPs), which vary from stock to stock.
Here are the current circuit breakers, which have only been tripped twice—on the same day—October 27, 1997.
Level 1 Halt
An 1,050-point drop in the DJIA before 2 p.m. will halt trading for one hour; for 30 minutes if between 2 p.m. and 2:30 p.m.; and have no effect if at 2:30 p.m. or later unless there is a level 2 halt.
Level 2 Halt
A 2,150-point drop in the DJIA before 1:00 p.m. will halt trading for two hours; for one hour if between 1:00 p.m. and 2:00 p.m.; and for the remainder of the day if at 2:00 p.m. or later.
Level 3 Halt
A 3,200-point drop will halt trading for the remainder of the day regardless of when the decline occurs.
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