Election shock could activate circuit breakers

Precautions to control market-shocking events could kick in when stocks begin regular trading Wednesday following the surprise election results.

Stocks around the world are plunging as traders price in the unexpected election of Donald Trump as president. Trump's anti-free trade platform is expected by investors and many economists to hurt global trade as well potentially slow the U.S. economy. The futures market indicated that the Standard & Poor's 500 is down 88.25 points to 2047.25, according to Bloomberg data.

Revised circuit breakers approved by the Securities and Exchange Commission in 2012 set three levels of declines where markets are potentially halted to give traders a chance to collect themselves. Based on current trading, if the market were to open similarly, the market is close to triggering the first circuit breaker which kicks in with a 7% decline. That  would be activated with an S&P 500 level at 1989.79. A drop of that size prior to 3:25 p.m. will halt trading for 15 minutes. After 3:25 p.m., there is no halt.

There is a second level that kicks in at a 13% decline or 1861.42 on the S&P 500. The second level follows the same halt rules.

The third level kicks in with a 20% decline which is 1711.65 for the S&P 500.  Once stocks fall by this much, trading is halted for the rest of the day no matter when it occurs.

KEY CIRCUIT BREAKERS

These levels kick in based on declines from the previous day's trading, which was 2139.56 on Monday

Trading circuit level, % decline, S&P 500 level

1, 7%, 1989.79

2, 13%, 1861.42

3, 20%, 1711.65

Source: Securities and Exchange Commission