Which 1987 market safeguard pauses trading after exceptionally large U.S. stock-index moves?

A circuit breaker is the 1987 market safeguard that pauses trading after exceptionally large U.S. stock-index moves.

Circuit breakers were developed after Black Monday on October 19, 1987, when the Dow Jones Industrial Average fell about 22.6% in one session. Their purpose is to create a temporary pause so investors can assess information and orders rather than continuing an uncontrolled rush to buy or sell.

Modern U.S. rules use percentage thresholds tied to the S&P 500. A Level 1 or Level 2 decline can halt regular trading for 15 minutes, while a Level 3 decline can stop trading for the rest of the session. The exact thresholds and procedures have changed over time.

Circuit breakers do not prevent losses or guarantee that prices will recover. They are pauses in trading, not price supports. Individual stocks may also be subject to separate limit-up/limit-down rules designed to reduce sudden disorderly price movements.