Circuit breakers were introduced in the United States after the 1987 crash.
Circuit breakers are rules that temporarily halt or restrict trading when prices move by specified amounts. They were developed after Black Monday, when exceptionally rapid selling made it difficult for investors and exchanges to process information in an orderly way.
The goal is not to guarantee prices or prevent losses. A pause gives market participants time to assess news, confirm orders, and communicate with one another. U.S. exchanges later adopted coordinated mechanisms for individual securities and broad market indexes, with thresholds and procedures changing over time.
Circuit breakers are sometimes confused with ordinary trading halts. A trading halt can apply to one company because of news or an order imbalance, while a market-wide circuit breaker is triggered by a large move in a broad index. Both are temporary interruptions, but their purposes and triggers differ.