Circuit Breaker: What Does It Mean?

A market circuit breaker is a regulatory mechanism that temporarily halts trading on a stock exchange when prices fall too sharply in a short period — designed to prevent panic-driven market crashes. The U.S. has three levels: a 7% drop in the S&P 500 triggers a 15-minute halt, a 13% drop triggers another 15-minute halt, and a 20% drop halts trading for the rest of the day. Circuit breakers were introduced after the 1987 stock market crash ('Black Monday') and were triggered several times during the COVID-19 market selloff in March 2020.