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NYSE Circuit Breakers Move From Dow Jones to S&P 500

By Anders Bylund – Jan 2, 2013 at 5:30PM

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One important safeguard against panic-induced market crashes finds a new set of trigger conditions, based on a broader-market index.

On New Year's Day, NYSE Euronext (NYX.DL) announced its quarterly changes to the circuit-breaker triggers. These are safeguards against market panics that would put a temporary stop to NYSE trading if the Dow Jones Industrial Average (^DJI -0.38%) fell too far, too fast.

The trigger levels have generally stabilized over the last year, in concert with the Dow's overall direction:


Q1 2012
Trigger Levels

Q4 2012
Trigger Levels

Q1 2013
Trigger Levels

Level 1 Halt (generally a 1-hour trading pause)

-1,200 points

-1,350 points

-1,300 points

Level 2 Halt (generally a 2-hour trading pause)

-2,400 points

-2,700 points

-2.650 points

Level 3 Halt (no more trading that day)

-3,600 points

-4,050 points

-3,950 points

Source: NYSE press releases.

But this update came with a surprise: The NYSE will switch its trigger calculations trom the Dow to the broader S&P 500 (^GSPC -1.03%) index on Feb. 4.

The exchange did not say what brought on this sudden and previously unannounced change in philosophy. Both the Dow and S&P 500 indexes are managed under the S&P/Dow Jones Indices umbrella, which is a joint venture between Dow Jones owner CME Group (CME 0.32%) and S&P manager McGraw-Hill (SPGI -2.67%).

Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+.

The Motley Fool owns shares of CME Group and McGraw-Hill Companies. Motley Fool newsletter services have recommended buying shares of NYSE Euronext. The Motley Fool has a disclosure policy.

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