Finance glossary
Circuit Breaker
Definition
An automatic trading halt triggered by sharp market declines.
Circuit breakers temporarily pause trading on an exchange when prices fall by preset percentages, giving markets time to absorb information and curb panic. U.S. markets use tiered thresholds of 7, 13, and 20 percent on the S&P 500. They were introduced after the 1987 crash.
In a sentence
A circuit breaker halted trading for 15 minutes after the S&P 500 plunged 7% at the open.
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