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To find the skinny on "curbs," we checked the Yahoo! Reference and Guides category (under Business > Investment). There we found a very cool site called The Investment FAQ. FAQ stands for "frequently asked questions" and if "What are trading curbs?" doesn't qualify, then who knows what does. We headed straight for the site's front-page search box, entered the word "curbs" and a single result was returned: an article titled "Exchanges - Circuit Breakers and Other Trading Restrictions." There we found an explanation of the New York Stock Exchange collar (also
known as Rule 80A), which is what they're talking about when they say "curbs in." Here is an excerpt: This restriction is triggered if the Dow Jones Industrial Average (DJIA) moves up or down by 50 points¿. If this trigger occurs, program trading curbs are put in effect. Essentially, a key computer is turned off, so program trading must be done 'by hand.' This rule is also known as the 'uptick downtick rule' (more formally: index arbitrage tick test) because it restricts sells to upticks and buys to downticks. Basically put, this means that after the market has moved 50 points in one direction, computerized trading systems are "encouraged" to reduce volatility rather than exacerbate it. The article also goes on to describe the more drastic "circuit
breakers" that occur when the Dow falls 10, 20, or 30 percent in a day. Plus, you'll find a link to the NYSE's page on trading curbs, which explains that the trigger for curbs was just recently changed to two percent of the Dow's closing price, rather than the arbitrary 50 points.
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