Which 1987 market crash safeguard pauses trading when prices move too far too fast?

A circuit breaker is the 1987 market-crash safeguard that pauses trading when prices move too far too fast.

Circuit breakers are automatic trading halts designed to slow panic and give investors time to assess new information. They became a major response to Black Monday, the October 19, 1987, crash in which the Dow Jones Industrial Average fell 22.6 percent.

In the United States, market-wide circuit breakers are linked to percentage moves in the S&P 500 Index. Level 1 and Level 2 halts pause trading for 15 minutes after sufficiently large declines before 3:25 p.m. Level 3 closes regular trading for the day after the largest threshold is reached.

These safeguards are not the same as a margin call. A margin call demands additional collateral from an investor whose leveraged position has lost value. Circuit breakers also differ from individual stock halts, which can stop trading in one security because of unusual activity or important news. Their purpose is temporary market-wide stability, not permanent price control.