What’s a circuit breaker?

After the 1987 stock market crash, known as “Black Monday,” the US Securities and Exchange Commission adopted market-wide circuit breakers, or certain thresholds at which trading is halted for a pre-defined period of time. These circuit breakers were updated in 2012 in order to make them more meaningful in today’s high speed electronic markets. 

Market-wide trading halts are designed to curtail panic selling during volatile periods. When these take effect, all trading temporarily stops on US equities, options, and futures exchanges.