Timeout: The Rules of Automatic Stock Halts

Fox Business ^ | October 10, 2008 | Associated Press Staff

[Pan_Yan]

As harrowing as the U.S. stock market's plunges have been in recent days, they still haven't been enough to trigger the "circuit breaker" mechanisms that result in an automatic timeout in trading.

The Big Board implemented the automatic halts after the stock market crashed in the late 1980s to force traders to take a break from frenzied selling. But even amid the massive losses seen in the market this week, the thresholds have yet to be breached, unlike in many other nations which have temporarily suspended trading multiple times.

On Friday, the stock exchange in Vienna was suspended until midday after stocks tumbled 10% at the opening bell, and in Russia representatives of the MICEX and RTS exchanges said they suspended regular trading until further notice under orders from financial regulators.

[Pan_Yan]

I was suprised to find out how many people, even those in the financial industry, didn't know there were safeties like this built into the stock market. It might be a good thing to remember if this week is anything like last.