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Since then, circuit breakers have evolved from a Dow Jones Industrial Average points-based system into a percentage change system that tracks the S&P 500. believes this instance of use was unnecessary, The NYSE formerly implemented a curb on program trading under certain conditions.
It is there that the specifics of circuit breakers are elaborated and the various price limits are outlined for investors to see.
This rule is in place to combat security specific volatility as opposed to market wide volatility.
The thresholds for a trading halt on an individual security are as follows.
There is a security specific circuit breaker system, similar to the market wide system, that is known as the "Limit Up - Limit Down Plan" (LULD).
This LULD system succeeds the previous system which only prevented dramatic losses, but not speculative gains, in a short amount of time.
The original intent of circuit breakers was not to prevent dramatic but fair price swings, rather to allow time for sufficient communication between traders and specialists.