Circuit breaker (markets).

In plain English

A market-wide circuit breaker pauses trading across U.S. equity markets when a benchmark index declines by defined percentage thresholds from the prior close. The rules use several tiers, where the first two trigger a timed pause and the deepest one closes the market for the rest of the day. Thresholds and durations are set by exchange rules approved by the SEC, so the current levels come from those rules rather than from any single firm. The purpose is to interrupt a cascade, let information spread, and give participants a moment to reassess, not to prevent losses. Circuit breakers apply to the whole market at once, which is what separates them from single-stock mechanisms.

01Why it matters

During a halt nobody can trade, so a circuit breaker takes the exit away for a defined period, and that is worth knowing before building a plan that depends on selling in a crash.

02The math, step by step

Say an index closed the prior day at 5,000, and for illustration the first tier is a 7 percent decline. The trigger sits at 5,000 minus 350, or 4,650. Touching it during the session starts a timed pause. The real tiers and durations come from the exchange rules, not from this example.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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