March 2020
Market Madness
What Are Circuit Breakers?
Circuit breakers are measures approved by the Securities and Exchange Commission (https://www.investopedia.com/terms/s/sec.asp) (SEC) to curb panic-selling on U.S. stock exchanges. They apply both to broad market indices such as the S&P 500 as well as to individual securities.
Circuit breakers halt trading on the nation’s stock markets during dramatic drops and are set at 7%, 13%, and 20% of the closing price for the previous day. The circuit breakers are calculated daily.