The 1987 trading-day rule introduced after Black Monday to halt extreme market declines was a circuit breaker.
Circuit breakers are automatic or exchange-triggered pauses that temporarily stop trading when prices fall or rise beyond specified thresholds. They were developed after the worldwide market turmoil of October 1987, when rapid selling overwhelmed normal trading processes.
The United States introduced marketwide circuit breakers in 1988. Their purpose was to give investors time to absorb information, reduce panic, and allow exchange systems and participants to catch up with orders. The precise thresholds and procedures have changed over time.
A circuit breaker is different from a margin call. A margin call demands additional collateral from an investor whose leveraged position has lost value, while a circuit breaker pauses trading across a market or security. Both can appear during a crash but serve different functions.