Iceland’s main stock index fell by approximately 76% on October 14, 2008.
The collapse occurred during the global financial crisis, after the highly leveraged Icelandic banking system failed. Iceland’s three largest commercial banks—Glitnir, Landsbanki, and Kaupthing—were placed into receivership or taken under state control in October 2008.
Trading on the Iceland Stock Exchange was suspended for several days. When the market reopened, shares in the major banks were removed from the index or rendered effectively worthless, producing an extraordinary one-day decline in the OMX Iceland 15.
The fall is sometimes described as a normal market-wide percentage loss, but the index’s composition changed dramatically because the failed banks had represented most of its value. Iceland’s banking crisis therefore combined a stock-market collapse with currency pressure, emergency government measures, and an international rescue program.