Circuit Breakers

After the 1987 stock market crash, the New York Stock Exchange established circuit breakers to help reduce volatility during a market downturn. If the Dow Jones Industrial Average (DJIA) experiences a substantial single-day decline, the circuit breakers pause trading for a specified time period or close the market for the rest of the day.

Historical Levels

When they were first implemented, a 250-point drop halted trading for one hour, and a 400-point drop halted trading for two hours.

From February 1997 to April 1998, a 350-point drop would halt trading for 30 minutes, and if this circuit breaker were triggered in the last 30 minutes of the session, the market would close for the day. A 550-point drop would cause the market to close for 1 hour or for the rest of the day if it were triggered within the last hour of trading.

Over the past ten years, circuit breakers have only been triggered once. On October 27, 1997, the DJIA fell 350 points at 2:35 p.m. ET and 550 points at 3:30 p.m. ET. Due to the timing of the declines, the market closed for the rest of the day.

Current Levels

New market-wide circuit breakers were established by the SEC in April 2013. Cross-market trading halts can be implemented if the S&P 500 reaches three levels: 7% (Level 1), 13% (Level 2), or 20% (Level 3).

Any market decline that triggers a Level 1 or Level 2 circuit breaker prior to 3:25 p.m. ET will halt trading for 15 minutes. If the decline happens at or after 3:25 p.m. ET, trading will not be impacted. A market decline that triggers a Level 3 circuit breaker at any time will halt trading for the rest of the day.

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