Well, it is arbitrary. The problem is not so much that this particular threshold is arbitrary, but that the rule was made after the fact. For what is worth, in

Well, it is arbitrary. The problem is not so much that this particular threshold is arbitrary, but that the rule was made after the fact. For what is worth, in Japanese exchanges the price of any stock cannot go up or down by more than a pre-defined limit. For instance, if Sony's closing price was 100 yesterday, today the lower and upper limits would be 80 and 120. If the price goes down to 80, Sony stops trading. That's a kind of interventionism and some people don't like it, because you might have the stock and there might someone willing to buy for 79 but you can't sell it. But the limits do prevent wild volatility, and it's well known that they exist so everyone can take it into account.