Stock Market Circuit Breakers
Market-Wide Circuit Breakers – The securities and futures exchanges have procedures for coordinated cross-market trading halts if a severe market price decline reaches levels that may exhaust market liquidity. These procedures, known as market-wide circuit breakers, may halt trading temporarily or, under extreme circumstances, close the markets before the normal close of the trading session.
Concept at a glance
Definition and explanation
Market-Wide Circuit Breakers – The securities and futures exchanges have procedures for coordinated cross-market trading halts if a severe market price decline reaches levels that may exhaust market liquidity. These procedures, known as market-wide circuit breakers, may halt trading temporarily or, under extreme circumstances, close the markets before the normal close of the trading session. [1]
Market-wide circuit breakers provide for cross-market trading halts during a severe market decline as measured by a single-day decrease in the S&P 500 Index. A cross-market trading halt can be triggered at three circuit breaker thresholds—7% (Level 1), 13% (Level 2), and 20% (Level 3). These triggers are set by the markets at point levels that are calculated daily based on the prior day’s closing price of the S&P 500 Index. [1]
A market decline that triggers a Level 1 or Level 2 circuit breaker before 3:25 p.m. will halt market-wide trading for 15 minutes, while a similar market decline “at or after” 3:25 p.m. will not halt market-wide trading. A market decline that triggers a Level 3 circuit breaker, at any time during the trading day, will halt market-wide trading for the remainder of the trading day. [1]
Limit Up-Limit Down Circuit Breaker (Single Stock Circuit Breaker) – The Limit Up-Limit Down circuit breaker (“LULD”) is a market volatility moderator designed to prevent large, sudden price moves in a stock. In particular, it prevents trades in individual securities from occurring outside of a specified price band. This price band is set at a percentage level above and below the average price of the stock over the immediately preceding five-minute trading period. If the stock’s price moves to the price band and does not move back within the price bands within 15 seconds, trading in the stock will pause for five minutes. These price bands are 5%, 10%, 20%, or the lesser of $.15 or 75%, depending on the price of the stock and whether the stock is designated as a Tier 1 or Tier 2 NMS stock. Tier 1 NMS stocks include all securities in the S&P 500, the Russell 1000 and select Exchange Traded Products. Tier 2 NMS stocks include all other NMS securities , except for rights and warrants, which are specifically excluded from coverage. The LULD applies during regular trading hours from 9:30 am ET – 4:00 pm ET. The LULD’s price bands double during the last 25 minutes of the regular trading day for (i) all Tier 1 NMS stocks and (ii) Tier 2 NMS stocks at or below $3.00. [1]
For additional information about the market-wide and LULD circuit breakers, please read the following: [1]
Source-supported connections
Frequently asked questions
What does Stock Market Circuit Breakers mean in the cited reference?
Market-Wide Circuit Breakers – The securities and futures exchanges have procedures for coordinated cross-market trading halts if a severe market price decline reaches levels that may exhaust market liquidity. These procedures, known as market-wide circuit breakers, may halt trading temporarily or, under extreme circumstances, close the markets before the normal close of the trading session. [1]
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Sources and review dates
Reviewed 23 October 2026. Historical dates and award-time affiliations retain their original context. A review date is not an event date. Background sources are identified separately from official records.