The 1987 crash led to the introduction of U.S. stock-market circuit breakers as a safeguard against extreme volatility.
Circuit breakers are automatic trading halts or restrictions triggered when an index or security moves by a specified amount. Their purpose is to give investors time to absorb information, reduce panic, and allow exchanges and clearing systems to handle rapidly changing orders.
The safeguards were developed after Black Monday, when the Dow fell 22.6% in one session and computerized trading helped accelerate selling. U.S. regulators approved coordinated market-wide mechanisms in the aftermath, with the first system taking effect in 1988.
A circuit breaker is not the same as a margin call. A margin call demands more collateral from an investor whose leveraged position has lost value; a circuit breaker temporarily limits trading across a market or in a security.