The U.S. stock markets have "curbs" that kick in to slow down trading when things get too wild.
The restrictions kick in when the market moves quickly up or down. The bigger the movement, the more restrictive the curb. Trading restrictions affect trading on the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange (CME) where S&P 500 futures contracts are traded. When these restrictions are triggered, you may hear the phrase "curbs in."
Invest FAQ explains:
| Restriction | Triggered by |
|---|
| NYSE collar (Rule 80A) | NYA moves 2% |
| CME restriction 1 | S&P500 futures contract moves 2.5% |
| CME restriction 2 | S&P500 futures contract moves 5% |
| CME restriction 3 | S&P500 futures contract moves 10% |
|
| NYSE circuit breaker nr. 1 | DJIA moves 10% |
| NYSE circuit breaker nr. 2 | DJIA moves 20% |
| NYSE Circuit breaker nr. 3 | DJIA moves 30% |
The circuit breakers cut off the automated program trading initiated by the big brokerage houses. The big boys have their computers directly connected to the trading floor on the stock exchanges, and hence can program their computers to place direct huge buy/sell orders that are executed in a blink. This automated connection allows them to short-cut the individual investors who must go through the brokers and the specialists on the stock exchange.
