As Facebook plunged more than 12 percent early today, a
number of people asked why Facebook never hit circuit breakers designed to halt
a collapse, according a BusinessInsider report.
Here's the reason: Facebook shares stopped declining at $35
a share, or a drop of 7.8 percent, at 9:34 a.m. and held there for six minutes. The SEC requires all exchanges halt
single-security trading if shares decline more than 10 percent in a five minute
period, so long as the active stock is priced above $1. If a halt is triggered,
shares would be paused for a five minute window before resuming again.
For Facebook, that would mean a fall to $34.20 by 9:35 a.m.
for the NASDAQ to hold trading.
The SEC has different requirements for exchanges like the
Dow Jones Industrial Average, S&P 500 and Nasdaq. At the start of each quarter, each market
sets trading limits at 10, 20 and 30 percent declines. If at any point during a
trading day markets were to pass through those levels, trading would be halted
for at least half an hour (unless a decline between 10 and 20 percent occurs
after 2:30 p.m.)…..
Read more: http://www.businessinsider.com/this-is-why-facebooks-12-collapse-didnt-trigger-circuit-breakers-2012-5#ixzz1vWFzrUNp
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