How New Circuit Breakers Work

It would take a breathtaking crash of 900 points in the Dow Jones industrial average to activate the new circuit breakers at the New York Stock Exchange.

Federal regulators in April approved steeper limits to the point drops that halt trading. The new rules impose 10%, 20% and 30% limits and are recalculated quarterly.

A 900-point, or about 10%, drop before 2 p.m. EST would stop trading for an hour. The halt would last 30 minutes if the drop occurred between 2 p.m. and 2:30 p.m. There would be no halt if the 10% drop occurs in the last 90 minutes of trading.

The NYSE would halt trading for two hours if the index loses 1,750 points before 1 p.m. Trading would stop for an hour if the index loses 1,750 points before 2 p.m., and for the rest of the day if the Dow loses 1,750 points during the last two hours of trading.

A 2,650-point loss at any time would halt trading for the remainder of the day.

Long-standing limits on computer-run program trading kick in when the market swings 50 points in either direction.

Before the limits were extended, trading was suspended for half an hour if the Dow dropped 350 points and for one hour if the index fell 550 points.

Under the old rules, the market would close for the day if the 350 level was reached at 3:30 p.m. or if the 550 level was hit at 3 p.m. That last occurred Oct. 27, 1997, when the Dow fell 554.25 points, about 7%.