Stock Markets Exposed
What are the "brakes" on the US Stock Market to prevent a crash?
I am pretty sure that 'brakes' were put in place on the stock market to prevent a freefall crash but I can't seem to find any info about exactly at what point they kick in. They involve closing the market for a brief period followed by a close for the day if the market drops too severly. Anyone know the specifics or a website that lists them? Timely info for today! Thanks!
Public Comments
- You're talking about the Circuit Breakers. I believe they are set at 10%, 20% and 30%. You can find out more about them at this link: http://www.nyse.com/press/circuit_breakers.html Good luck
- In 1929, and prior, one could purchase stocks with a mere 10% deposit. As long as stocks rose in value, no additional money was required. As stocks began to fall, the average investor could not pay the margin of decrease in cash. The sale of stocks flooded the market, further reducing the values resulting in the crash of 1929. After that, the Feds required heavier investment to purchase stocks but still required the margins to be covered by the investor. With more initial investment, the likelihood of default is reduced. Closing the market is another protection. The other changes were to protect savings and bank failures. Thus FDIC was formed. Sorry, don't have a web site.
