U.S. Stock Limit Rules Halted Nasdaq Trading as Futures Soared

(Bloomberg) -- Nasdaq 100 stock futures rose fast enough to trigger an exchange volatility halt that pauses especially rapid swings at 3.5%, as traders assessed election results.

Contracts on the Nasdaq 100 rose jumped 3.5% within an hour, setting off a trading pause for two minutes. If gains extend to 7% from a Chicago Mercantile Exchange reference price calculated at the end of the trading day Tuesday, moves will be entirely capped with hard upside limits. Nasdaq futures are up 3.9% in the complete overnight session.

Stock futures triggered trading limits multiple times earlier this year in the midst of the Covid-19 crash. Then, though, the limits limits kicked in at 5%, and there was no threshold at the 3.5% mark. CME Group changed the limit restrictions last month.

“The rules were recently changed to better allow for price discovery, based on the findings of an industry-wide task force,” CME spokesperson Chris Grams said in an email.

According to a CME Group fact sheet, these “dynamic circuit breakers” are in place to “help reset the market if it moves too far, too fast.”

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