Trading Halts and Circuit Breakers
Chapters in this video
- 0:00 Why trading pauses: the three mechanisms
- 1:10 Regulatory halts: one stock, no quotes, no trades
- 2:16 Market-wide circuit breakers: S&P 500 trigger and three levels
- 3:58 The 3:25 PM cutoff and once-per-day rule
- 4:25 Limit Up-Limit Down: single security, rolling 5-minute average
- 5:48 Tier 1 (5%) and Tier 2 (10%) price bands
- 6:43 Why LULD bands double from 3:35 PM to 4:00 PM
- 7:05 Side-by-side: MWCB versus LULD distinctions
- 7:40 Rapid-fire exam recap
What this video covers
- What triggers a regulatory trading halt in a single security, and why absolutely no transactions or quotation activity are permitted during the halt
- How market-wide circuit breakers (MWCBs) use S&P 500 index declines from the prior day's close, not intraday highs or lows
- The 7%, 13%, and 20% MWCB levels, their 15-minute versus remainder-of-day durations, and why Level 1 and Level 2 do not trigger after 3:25 PM Eastern Time
- Why Level 1 and Level 2 halts can each occur only once per trading day, while Level 3 halts trading at any time including after 3:25 PM
- How the Limit Up-Limit Down (LULD) plan applies to individual National Market System (NMS) securities using rolling 5-minute average reference prices
- The Tier 1 (5%) and Tier 2 (10%) price bands for LULD, and when those bands double to 10% and 20% during the last 25 minutes of trading
- The three-step LULD sequence (price band hit, 15-second limit state, then 5-minute trading pause) and how to separate LULD from MWCB on exam questions
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