measures instituted by the major stock and commodities exchanges to halt trading in stocks and stock index futures temporarily when the market has fallen by an amount based on specified percentage declines in a specified period. Circuit breakers were originally instituted in 1987. They are subject to change from time to time, but may include trading halts, curtailment of automated trading systems, and/or price movement limits on index futures. Their purpose is to prevent a market free-fall by permitting a rebalancing of buy and sell orders and to give the general public an opportunity to catch up on current news.
measures instituted by the major stock and commodities exchanges to halt trading temporarily in stocks and stock index futures when the market has fallen by an amount based on specified percentage declines in a specified period. For example, circuit breakers instituted at the New york Stock Exchange in spring 1998 halt stock trading when the Dow Jones Industrial Average falls 10%, 20%, and 30%, with the point settings revised quarterly on the first day of January, April, July, and October. Circuit breakers were originally instituted after black monday in 1987 and modified following another sharp market drop in October 1989. They are subject to change from time to time, but may include trading halts, curtailment of automated trading systems, and/or price movement limits on index futures. Their purpose is to prevent a market free-fall by permitting a rebalancing of buy and sell orders.
