Reading the Reference Price and Percentage Parameter That Set a Limit State Band
A halt band is an arithmetic output, not a market judgment When a US stock stops trading because its quote reached a limit, two numbers produced that outcome, and a securities information processor computed both from a published rule: the National Market System Plan to Address Extraordinary Market Volatility, filed under File No. 4-631 and known as limit up-limit down, or LULD. It takes a Reference Price and a Percentage Parameter, multiplies one by the other, and publishes a Lower Price Band and an Upper Price Band. The halt is downstream of those two inputs. This is a separate mechanism from the market-wide circuit breakers, measured against the S&P 500 Index rather than a single stock. In the Commission's investor education material, a 7 percent decline is a Level 1 event and a 13 percent decline is a Level 2 event, each halting trading market-wide for 15 minutes when triggered before 3:25 p.m., while a 20 percent decline is a Level 3 event that stops trading for the rest ...