The stock market nosedived on Monday, Feb. 5. The Dow Jones Industrial Average dropped 1,175 points, or 4.6%, in its largest single-day point drop ever. The S&P 500 declined 4.1% and the Nasdaq tumbled 3.8%.
These are the details you need to know about trading halts put in place to protect against market crashes.
Per NYSE Rule 80B, a 15-minute circuit-breaker trading halt kicks in for a Level 1 decline when the S&P 500 falls 7% before 3:25 p.m. EST. In the case of an early scheduled close, the decline has to take place before 12:25 p.m. EST.
A Level 2 decline occurs when the S&P 500 falls 13% during that time frame -- it also results in a 15-minute trading halt. A Level 3 decline requires a 20% fall on the S&P 500 -- in that case, trading would be halted for the remainder of the day.
A Level 1 or Level 2 halt can only occur once per trading day, according to the NYSE's rules.
"For example, following the reopening of trading after a Level 1 Market Decline halt, the NYSE would not halt the market again unless a Level 2 Market Decline was to occur. Likewise, following the reopening of trading after a Level 2 Market Decline, the NYSE would not halt trading again unless a Level 3 Market Decline were to occur, at which point, trading in all stocks would be halted until the primary market opens the next trading day," the exchange writes.