The 1987 U.S. market rule that halted trading after sharp price declines was a circuit breaker.
Circuit breakers were introduced after the October 1987 crash, when prices fell so quickly that exchanges and market participants struggled to process orders and information. The original system used market-wide trading curbs tied to declines in the Dow Jones Industrial Average.
Modern U.S. rules use percentage declines in the S&P 500. A Level 1 halt is triggered by a 7% decline, Level 2 by 13%, and Level 3 by 20%, with the largest threshold closing the market for the rest of the session. Separate rules can pause trading in individual securities.
A circuit breaker is not the same as a margin call. A margin call demands additional collateral from an investor, while a circuit breaker temporarily interrupts trading.