These Improved Rules Will Cease Stock Market Trading For An Entire Day
As the US continues its sluggish recovery, economists are trying to develop a strategy to pump the brakes on stock exchanges should times of turmoil arise again.
To be better prepared, the country's three major exchange operators—the NYSE, Nasdaq and Bats Global Markets—have updated their rules to prevent repeat chaos, particularly like that of Aug. 24 last year when more than $1.2 trillion in market value was wiped from US shares before the Dow Jones Industrial Average rebounded by 1,000 points in one day, Bloomberg reports.
Now there's a circuit breaker in place that will stop all trading for 15 minutes whenever there's a decline of 7%, and another pause when markets drop 13%. The market will cease trading an entire day if there is ever a 20% dive. [Bloomberg]
