New circuit breakers adopted by the New York Stock Exchange could provide some comfort to critics who oppose intervention in the market to halt trading when prices go into a tailspin.
The NYSE on Thursday voted to raise the threshold for trading curbs to market drops of 10 percent, 20 percent and 30 percent. The market has fallen 20 percent in one day just once and 10 percent twice - but not recently.The changes are being made to because of concerns the current triggers are too low and can aggravate market instability. They now stand at market drops of 350 points, which is currently equal to about 4 percent, and 550 points, or about 7 percent.
Even at those levels, the triggers have only been activated once: last Oct. 27. But that sparked howls of protest and a push to raise the limits intensified. The discussion even reached the floor of Congress.
The circuit breakers, installed after the October 1987 stock market crash, are designed to give investors time to calm down during severe price declines and prevent another market meltdown.
But critics said that during the October sell-off - especially with the limits so low - the curbs worsened the panic because investors were rushing to sell their stocks before the markets shut down and locked them out.