Circuit Breaker |
| A defensive regulation imposed by some stock exchanges to limit the damage of a sharp fall in prices. The reasoning is that downward price movements attain their own dangerous momentum and can lead to panic selling. Circuit breakers allow the exchange to suspend trading to stop things getting out of hand. On the New York Stock Exchange, for instance, there are rules allowing the exchange to stop trading for the rest of the day if the Dow index falls 30% from the previous day's close. |
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