Why didn circuit breakers work before?
The problem with the circuit breakers in place right now is that they’re set up as if the stock market were a single entity. And actually there are lots of exchanges — each with different rules for setting off the circuit breakers. During the flash crash, markets didn’t have uniform circuit breakers. Each exchange had its own rules. Manual traders had one set of rules and the electronic exchanges had another. And the Dow didn’t fall quite far enough to trigger those existing circuit breakers. Basically, the circuit breakers in place weren’t sensitive enough to go off on May 6 when the markets went so crazy. When do these rules take effect? There’s a short comment period. But it seems like most people think the new rules are a good idea, so the rules should go into effect by mid-June. After that, there’s a six-month trial, to see how well they work. And during that time, regulators will also look at other questions, like whether to make the existing circuit breakers more responsive. An
