How Will the Circuit Breakers Work?
The circuit breaker system will only work between 9:45 and 3:35, allowing for large changes in price at open to reflect overnight developments, and the system will cease before market close to not restrict investors from cashing out of a position before the day ends. This is important for day traders and swing traders, who usually rely on leverage and are charged carry fees on the margin if positions are held overnight. Rules Expansion The SEC will look to expand the rules to more individual stocks and ETFs “as soon as practical,” hoping to curb rapid selling or buying sprees spawned by electronic trading on all stocks. In addition, although not mentioned in the recent release, analysts expect a similar macro circuit breaker to be applied to general indexes. Whether or not the rules will stick is still up for debate. A ten-day session will soon be held to discuss the effects of the circuit breaker system on the stock markets.
