Which 1987 crash-response measure pauses trading after unusually large market declines?

A circuit breaker is the 1987 crash-response measure that pauses trading after unusually large market declines.

Circuit breakers were introduced in the United States after Black Monday exposed how quickly automated and human selling could overwhelm market systems. A pause gives investors time to process information and gives exchanges an opportunity to manage order imbalances.

Modern U.S. market-wide circuit breakers are tied to declines in the S&P 500 from its previous closing level. Level 1 and Level 2 thresholds can halt trading for 15 minutes, while a Level 3 decline stops trading for the rest of the session.

Circuit breakers do not prevent losses and do not guarantee that prices will recover. They are also different from price limits on individual securities, which restrict how far one stock can move without necessarily closing the whole market.