The emergency trading halt rule introduced by U.S. exchanges after the 1987 crash was known as a circuit breaker.
Circuit breakers are automatic mechanisms that pause trading when a market or security moves beyond specified thresholds. Their purpose is to give investors time to absorb information and reduce the risk that automated or panic-driven orders will create an uncontrolled cascade.
The U.S. Securities and Exchange Commission approved new market-wide trading halts after Black Monday in 1987. Modern U.S. rules use percentage declines in the S&P 500 to determine Level 1, Level 2, and Level 3 market-wide pauses during regular trading.
Circuit breakers do not prevent prices from falling, and they are not the same as the uptick rule, which concerns short selling. The Glass–Steagall Act and Volcker Rule are banking regulations rather than emergency trading halts. These distinctions are important because all four terms appear in discussions of financial regulation.