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The stock market can halt, or "pause," trading if individual securities or the entire market experiences significant price swings. These mechanisms are known as circuit breakers. The New York Stock Exchange (NYSE), for example, has procedures for halting trading based on substantial movements in the Dow Jones Industrial Average (DJIA).
In 2020, there were several occasions when trading on the NYSE was temporarily halted due to market volatility, mostly driven by concerns over the COVID-19 pandemic. These halts were activated by so-called circuit breakers, which were triggered several times in March 2020.
The circuit breaker thresholds on the NYSE are set to pause trading if the S&P 500 index drops by certain amounts from its previous close:
Level 1: If the S&P 500 drops 7%, trading will pause for 15 minutes.
Level 2: If the S&P 500 drops 13%, trading will again pause for 15 minutes, unless it's after 3:25 p.m., at which point trading will continue.
Level 3: If the S&P 500 drops 20%, trading would stop for the remainder of the day.
These trading halts are in place to prevent panic-selling, allowing investors to understand the situation better before making further trades. They were put in place after the market crash in 1987 (also known as Black Monday) to prevent future financial meltdowns.
Please note that if you're asking about a specific event that took place in the latter part of 2020, my knowledge cutoff is in September 2021, and you may need to look up the most recent information.
17 июн 2023
