When Stock Market Circuit Breakers Kick In

As harrowing as the U.S. stock market's plunges have been in recent weeks, they've yet to be been enough to trigger the "circuit breaker", or trading halt, mechanisms that result in an automatic timeout in trading.

The Big Board implemented the automatic halts after the stock market crashed in October 1987 to force traders to take a break from frenzied selling.

The Dow Jones industrial average would have to fall 1,100 points in a day to trigger the first halt.

If that decline is reached before 2 p.m., the market will shut down for an hour. If the threshold is breached between 2 p.m. and 2:30 p.m., the halt will last 30 minutes. No trading stops would take place if the plunge occurs after 2:30 p.m.

If the index were to fall 2,200 points before 1 p.m., the market would close for two hours. If such a decline took place between 1 p.m. and 2 p.m., there would be a one-hour pause. The market would close for the day if stocks sank to that level after 2 p.m.

In the event of a 3,350-point decline, the market would close for the day, regardless of the time.

The thresholds are computed at the beginning of each quarter to establish a specific point value for the quarter. The 1,100-point drop represented a 10 percent decline at that time; the 2,200 level, a 20 percent drop and the 3,350 level is a 30 percent drop.

The rules would halt trading on the major securities and futures exchanges in a coordinated cross-market halt if the circuit breaker is enacted.

The last time the markets were shut down was during the 9/11 period.