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US Futures Limits Hit, Trading Suspended


andysinclair

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US futures limits hit this morning: "trading in some of the world’s most popular equity contracts went quiet when declines reached 5%, setting off Chicago Mercantile Exchange limits that keep prices from falling further."

More details here from Bloomberg: https://www.bloomberg.com/news/articles/2020-03-08/rout-in-u-s-stock-futures-would-trigger-trading-curbs-at-5

Currently suspended on the IG platform:

image.png.24e2fe9655c69a50a828b04517efc49d.png

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Morning all,

Downside price limits for US futures:

ESqjo6uXQAML9X8.png

At present we have hit the 5% circuit breaker. US futures limits increase to the main session levels at 1330 UK time (0830 Chicago).

https://www.cmegroup.com/trading/price-limits.html#equityIndex

Clients are not able to sell (either to open or close) when futures are suspended in this state.

Please note this is a function of the underlying exchange. This will apply globally for all brokers, not just for clients of IG. 

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To give an indication of what could happen to US equity markets later:

  • Level 1: If the S&P 500 drops 7%, trading will pause for 15 minutes. 
  • Level 2: If the S&P 500 declines 13%, trading will again pause for 15 minutes if the drop occurs on or before 3:25 p.m. ET. There will be no halt the drop happens after that. 
  • Level 3: If the S&P 500 falls 20%, trading would halt for the remainder of the day. 
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The list below highlights some of the biggest price moves and their significance:

  • Brent crude fell as much as 31.4%, the biggest daily drop since the first Gulf War
  • The yield on 10-year U.S. Treasuries fell further to a record low of 0.4624%, having halved in just three sessions
  • The slump in yield signals another round of big rate cuts by global central banks
  • The 10-year Bund yield fell to a record low of -0.863%
  • U.S. stock futures plunged 5% to hit their daily down limit and halt trading
  • London's FTSE 100 shed 8.4% a few minutes after the open in its worst single-day drop since the financial crisis
  • London-listed Shell plunged 23% and BP 29% in their worst-ever intraday rout
  • The Russian rouble is down over 8%, on track for its worst drop since December 2014, also when oil prices plunged
  • The dollar extended its slide in Asia to as low as 102.60 yen , depths not seen since late 2016
  • Emerging-market stocks dropped over 4% and the world's biggest listed entity, Saudi Aramco , traded below its IPO price for the first time
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Hi if you have trade in place currently on IS futures, with the suspension in place can the DJI still gap down at the open ? Or are traders only allowed to buy before the open ? 

 

 

 

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On 09/03/2020 at 07:50, Ludwik Chodzko-Zajko IG said:

Morning all,

Downside price limits for US futures:

ESqjo6uXQAML9X8.png

At present we have hit the 5% circuit breaker. US futures limits increase to the main session levels at 1330 UK time (0830 Chicago).

https://www.cmegroup.com/trading/price-limits.html#equityIndex

Clients are not able to sell (either to open or close) when futures are suspended in this state.

Please note this is a function of the underlying exchange. This will apply globally for all brokers, not just for clients of IG. 

We're now experiencing Upside price limit for US futures: 

image.png

Please note this is a function of the underlying exchange. This will apply globally for all brokers, not just for clients of IG. 

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20 minutes ago, CharlotteIG said:

We're now experiencing Upside price limit for US futures: 

image.png

Please note this is a function of the underlying exchange. This will apply globally for all brokers, not just for clients of IG. 

 

 

Hmm ... trading suspension sounds like rather a different issue than resetting clients' valuable time frame analysis and dumping them into cr@ppy 5 minute charts.

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26 minutes ago, dmedin said:

 

 

Hmm ... trading suspension sounds like rather a different issue than resetting clients' valuable time frame analysis and dumping them into cr@ppy 5 minute charts.

Hey @dmedin

I completely understand your frustration with this. It's not ideal and I'm not excusing what's happened with the time frames but our technical team are working their hardest to get this resolved for clients. In the meantime I can only apologise for this error. 

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Limit up explained
A limit up is the maximum amount that the price of a stock or commodity futures contract will be allowed to increase in a single trading session. Both a limit up and a limit down are used to prevent certain assets reaching excessively high volatility levels.

Limit down explained
A limit down is the opposite to a limit up, and it sets the maximum amount that the price of a stock or commodity futures contract will be allowed to decrease in a single trading session. Limit downs seek to prevent panic selling and market crashes. This is because, if more and more traders begin to sell in a panic, the price of the underlying commodity will decrease in line with increased supply and lower demand in the market.

According to revised rules from the SEC from 2012, market-wide circuit breakers are activated at the following levels versus the previous day’s close:

A drop of 7% (Level 1)
A drop of 13% (Level 2)
A drop of 20% (Level 3)
If the market declines, triggering a Level 1 or Level 2 circuit breaker before 3:25pm ET, trading will be halted across the market for 15 minutes. Beyond 3:25pm will not halt trading. If a Level 3 is enacted with a 20% drop, trading will be halted for the rest of the day’s session.

Due to today’s market volatility, S&P futures have hit limit up. The break through the threshold means that buying the market is suspended.

Limit up (like today) means that buying is suspended, while limit down (like yesterday) means selling is suspended. The CME Group says 'Equity price limits are downside limits during U.S. trading hours, with hard upside and downside limits of 5% during non-U.S. trading hours.' When the out-of-hours session ends and it turns into the main session, the circuit breaker become 7% instead of 5%.

Today at IG therefore, if a market is in limit up, you would only be able to sell positions, whether open or close, through phone dealing.

 

Piece by Victoria Scholar 

https://www.ig.com/uk/news-and-trade-ideas/limit-up-and-limit-down-explained-200310

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We've just hit limit down for Wall st. 

On 10/03/2020 at 15:40, CharlotteIG said:

Limit down explained
A limit down is the opposite to a limit up, and it sets the maximum amount that the price of a stock or commodity futures contract will be allowed to decrease in a single trading session. Limit downs seek to prevent panic selling and market crashes. This is because, if more and more traders begin to sell in a panic, the price of the underlying commodity will decrease in line with increased supply and lower demand in the market.

 

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