In a historic move, the New York Stock Exchange invoked the little-used Rule 48 to preempt panic selling at the stock market open on Monday, CNBC reported. This followed a dramatic drop in pre-market open futures, with the Dow Jones Industrial Average futures falling more than 700 points.
Unlike a circuit breaker that stops stock trading, Rule 48 makes it easier and faster to open the stock markets when there are fears that the market could open with a lot of volatility that would disrupt trading. To invoke Rule 48, an exchange would have to determine that certain conditions exist that would cause market disruptions.
Rule 48 was approved by the Securities and Exchange Commission on Dec. 6, 2007 and has been rarely used.