Internet
circuit breaker
What does circuit breaker mean?
A circuit breaker is a regulatory mechanism that halts trading market-wide when an index falls a set percentage, to curb panic. On the S&P 500, a 7% drop triggers a Level 1 halt and 13% a Level 2 halt of 15 minutes.
"Stocks fell so fast at the open that a circuit breaker halted trading for fifteen minutes."
Origin
Borrowed from electrical circuit breakers that cut the current to prevent damage. Introduced after the 1987 crash.
Frequently asked questions
What is a circuit breaker in the stock market?
It's a regulatory mechanism that halts trading market-wide when an index falls a set percentage, designed to curb panic selling.
What triggers a circuit breaker?
On the S&P 500, a 7% drop triggers a Level 1 halt, 13% a Level 2 halt (each a 15-minute pause), and 20% a Level 3 halt that closes trading for the day.
Where does the term come from?
It's borrowed from electrical circuit breakers that cut the current to prevent damage; market circuit breakers were introduced after the 1987 crash.
Study it as flashcards or scroll it in Vocabulary Flow — saved to your collection.
