Unlike a circuit breaker that stops stock trading, 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.
Read MoreHow do market circuit breakers work?
To invoke Rule 48, an exchange would have to determine that certain conditions exist that would cause market disruptions. Those conditions include:
- volatility during the previous day's trading session
- trading in foreign markets before the open
- substantial activity in the futures market before the open
- the volume of pre-opening indications of interest
- government announcements
Rule 48 was invoked a few times in recent years, including on Tuesday, January 22, 2008 and on Thursday, May 20, 2010. In 2008, the stock markets were subject to great volatility over fears of a global recession and in 2010, the European debt crisis caused panic buying and selling. The rule was also invoked during the August-September 2011 time frame, when European debt crisis fears and U.S. government shutdown debate again roiled the markets, and in January 2015, during extreme winter weather.
In all, Rule 48 has been invoked 77 times since 2008 (it was approved by the Securities and Exchange Commission on Dec. 6, 2007.) Rule 48 waives requirements under the older Rule 123D for stock openings when an individual stock is going to open significantly lower or higher than the prior day's close.
And in what was quite likely a first for hidden stock exchange protocols—Rule 48 was trending on Twitter.