17.6.3.2. Market-Wide Trading HaltsAnother type of regulatory halt occurs in the case of a severe market decline. In this case, the SEC will move to halt trading across all markets. A market-wide trading halt will be triggered at three circuit breaker thresholds. These thresholds are triggered by steep declines in the S&P 500 Index. They are calculated based on the prior day’s closing price of the Index.
• Level 1 halt. A 7% drop in the S&P 500 prior to 3:25 p.m. ET will result in a 15-minute cross-market trading halt. There will be no halt if the drop occurs at or after 3:25 p.m. ET.
• Level 2 halt. A 13% drop in the S&P 500 prior to 3:25 p.m. ET will result in a 15-minute cross-market trading halt. There will be no halt if the drop occurs at or after 3:25 p.m. ET.
• Level 3 halt. A 20% drop in the S&P 500 at any time during the day will result in a cross-market trading halt for the remainder of the day.
These halts apply to securities and options trading on all the exchanges, as well as the OTC market. Levels 1 and 2 trading halts are permitted just once a day.
SUMMARY TABLE
Decline in S&P 500
Level 1 (7%)
Level 2 (13%)
Level 3 (20%)
Before 3:25 p.m. ET
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