(FiveNation.com)- On Monday morning, when widespread fear ensued after the failure of Silicon Valley Bank, trading in the shares of other banks was suspended. Shares of financial institutions that regulators have temporarily halted were listed on the Nasdaq Trader website.
A volatility trading pause, like a circuit breaker, had been triggered on all bank shares, temporarily suspending trading for a period of time if the price of a share fluctuated too wildly.
By 1:12 p.m. ET, shares of Charles Schwab Bank had dropped 10.61 percent.
In the wake of last week’s failure of Silicon Valley Bank, the announcement on Monday came as no surprise.
The Federal Deposit Insurance Corporation (FDIC) issued a statement saying the California Department of Financial Protection and Innovation announced the closure of Silicon Valley Bank in Santa Clara and the appointment of the Federal Deposit Insurance Corporation (FDIC) as receiver. All insured deposits of Silicon Valley Bank were transferred to the DINB at the moment of liquidation by the FDIC as receiver.
As defined by Investopedia, trading halts are temporary pauses in trading activity across several exchanges. According to Investopedia, trading halts are used before news announcements, to rectify order imbalances, or in response to a significant and unexpected shift in share price.
On Sunday, the Federal Deposit Insurance Corporation, the Federal Reserve, and the United States Department of the Treasury published a joint statement about the failure of Silicon Valley Bank.
They said they were adopting strong measures to safeguard the American economy and restore faith in the financial sector. With those in place, U.S. banks can continue safeguarding deposits and providing credit, two of its most essential functions in fostering robust and long-lasting economic expansion.
They also announced that Signature Bank in New York, New York, had been closed by its state chartering body due to systemic risk.
They said If you have money in this bank, you will get it back in full. The taxpayer will not be responsible for any damages in the settlement of Silicon Valley Bank.
