Monday, January 21, 2008

U.S. Stock Market Crash Prevention Mechanisms

Watching the European and Asian stock markets plunge this Monday and Tuesday (their time) prompted me to research what mechanisms are in place to prevent a market crash here in the U.S.

According to the following mechanisms are in place:

- The market will halt trading for an hour if the Dow drops 10% before 2 pm.
- Trading will halt for two hours if there is a 20% drop in the Dow before 2 pm.
- If the Dow drops 30%, trading is halted for the day.

DOW futures are pointing to a 5%+ drop tomorrow morning. This is coming at the heels of market drops around 7-10% overseas.

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