Market Wide Circuit Breakers - NYSE - and the impact on the MOASS

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| Author       | Source       | 
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|  [u/habitualpotatoes](https://www.reddit.com/user/habitualpotatoes/) | [Reddit](https://www.reddit.com/r/Superstonk/comments/mratzz/market_wide_circuit_breakers_nyse_and_the_impact/) | 

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[Possible DD 👨‍🔬](https://www.reddit.com/r/Superstonk/search?q=flair_name%3A%22Possible%20DD%20%F0%9F%91%A8%E2%80%8D%F0%9F%94%AC%22&restrict_sr=1)

In an effort to gain a wrinkle I decided to look into the halts we would expect to see on the way up during a MOASS, to help educate us all about what is purely normal market operation. I'll finish writing it up shortly, but one thing jumped out that I would love some eyes on.

<https://www.nyse.com/publicdocs/nyse/NYSE_MWCB_FAQ.pdf>

This is the PDF that explains Market Wide Circuit Breakers (MWCBs) for the NYSE. I've got a very smooth brain so most of it goes over my head, but it basically says if the overall market drops a bit from yesterday's closing (7%) - then the entire market is halted, if it drops more upon opening (13% more) then it's halted again and then a further 20% drop results in the market closing for the day.

What has this got to do with GME MOASS? That's about things going up right, not down? ~~Now we all know that~~ Short Hedge Funds might have an idea about using ETFs to short the entire market in order to kick the can down the road (I think I've seen just a little DD about this). Regardless, GME has a massive MASSIVE MASSIVE negative BETA which implies when GME Moons, the rest of the market seabeds/crashes.

So could GME starting to rocket cause the S&P500 to contract, either naturally as a sell off happens to cover margin calls, or artificially to trigger MWCBs? Similar to how for a long time we viewed SSR as being a tool to support the price... It feels like this might be something that could happen (notice might and could - this is just my smooth brain thinking aloud).

Now to be clear - this would not be GME 'CRASHING THE MARKET'. It would be a flash crash caused by the HFs over leveraged, unsustainable gambling they hadn't unwound when they could have in January.

So far it feels that this would be annoying - but not derailing.

However, when you get into the details on page 2 about what is needed for the market to re-open after a Tier 1 or Tier 2 halt - things get a little murkier. This is the part that really wrinkle brains would be great to get some thoughts on. Basically the market reopens after 15 minutes ONLY IF all *"Market Orders and MOO Orders and marketable Limit Orders and LOO Orders"* can be satisfied.

And it is up the Designated Market Makers to determine if this can happen. And guess who is one of the three DMMs? You'll be amazed to know that Citadel is - <https://www.nyse.com/markets/nyse/membership#:~:text=Designated%20Market%20Makers%20(DMMs)%20are,other%20DMMs%20and%20market%20participants>.

It's beyond my comprehension what tactics could be used here, either through the failing to achieve the ability to open the market after a 15 minute halt or the flash crashing of the whole market to force a day close, but it feels like a loose thread that Citadel has a controlling hand on.

Any thoughts from anyone would be a great help.

EDIT 1: ELI5 - NYSE has rules to pause and then close the market for the day if the price drops too much. Citadel is directly involved in the market being allowed to re-open. Can HFs use this to cause fuckery by either crashing the market, or stopping it from reopening when the MOASS naturally causes the rest of the market to drop?

EDIT 2: ELIA - GME 🚀🚀🚀🚀 - rest of market 🔥🔥🔥🔥 - Do 🐻use ☔to stop 🏏?

EDIT 3: This has been superseded by more wrinkles in EDIT 4 below . [u/robomailman](https://www.reddit.com/u/robomailman/) with a great wrinkly answer that appears to take the sell-off to cover margin calls out of the equation when it comes to these MWCBs being triggered:

*So the market wide drops from HFs liquidating will get pumped into the price of GME.. so potentially the market-wide effect is neutral? And these breakers won't come into play. I.e. very simplified but if GME is up 10,000% but another 1000 listed stocks are down 10%, the market is neutral.*

*That's the direct relationship anyway.. there will be indirect effects like market value lost where investors scared by the HF liquidatons selling and take their money out of the market, or the delay between HF liquidating and covering GME positions would mean not all of that is back into a GME increase. Whether these factors add up to a market wide depression high enough to trigger the tiered halts within the given timeframes I don't know.*

EDIT 4: every day is a learning day. U/tielore has pointed out that S&P calculation uses free float so doesn't take into account the sell off happening to pay for synthetic shares:

*If we assume that there are 800mm fake shares out there, and only 45mm real shares, then that 10,000% supposed increase in GME gets diluted down. Instead of GME being up 10,000%, once you deduct the fake shares that no longer exist after they've been bought back, you end up with the remaining 45mm shares getting only around 500% of that gain.*

<https://www.investopedia.com/ask/answers/040215/what-does-sp-500-index-measure-and-how-it-calculated.asp>
