Key points are not available for this paper at this time.
ABSTRACT This paper examines ex ante effects of circuit breakers (mandated trading halts). We show that circuit breakers, by causing agents to suboptimally advance trades in time, may have the perverse effect of increasing price variability and exacerbating price movements. We next consider a situation in which a circuit breaker causes trading to be halted in both a dominant (more liquid) and a satellite market. As agents switch from the dominant market to the satellite market, price variability and market liquidity decline on the dominant market and increase on the satellite market.
Avanidhar Subrahmanyam (Tue,) studied this question.
Synapse has enriched 5 closely related papers on similar clinical questions. Consider them for comparative context: