Circuit Breaker

Posted in Finance, Accounting and Economics Terms, Total Reads: 306
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Definition: Circuit Breaker

Circuit breaker is a technique in which the exchange implements breaks on the stock market activity by halting the trading to prevent rapid rise or fall in the stock market. This policy was introduced in NYSE after the fall in stock market on the black Friday. In India, this policy was introduced from July 02, 2001 based on SEBI Circular No. SMDRPD/Policy/Cir-37/2001 dated June 28, 2001.


It applies breakers at 3 stages of the index movement, one at 10%, then at 15% and last at 20% after which the trading is halted for the day.

Trigger limit

Trigger time

Market halt duration

Pre-open call auction session post market halt

10%

Before 1:00 pm.

45 Minutes

15 Minutes

At or after 1:00 pm upto 2.30 pm

15 Minutes

15 Minutes

At or after 2.30 pm

No halt

Not applicable

15%

Before 1 pm

1 hour 45 minutes

15 Minutes

At or after 1:00 pm before 2:00 pm

45 Minutes

15 Minutes

On or after 2:00 pm

Remainder of the day

Not applicable

20%

Any time during market hours

Remainder of the day

Not applicable


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