Circuit Breakers for Stock Markets with Cybernetic Avatars
摘要
As algorithmic or robot trading becomes more prevalent, stock markets may experience increased volatility and more frequent crashes. Circuit breakers which temporarily halt trading are considered a crucial component of stock markets, particularly in environments where robots and cybernetic avatars conduct transactions. But how effective are circuit breakers at stabilizing stock prices? Using forecast-based, non-linear regression models, we find that implementing a circuit breaker that suspends trading following a 7% or greater price decline is highly effective.