What is circuit breaker in the stock market?

1. If the index or any stock crosses the price range within which an index or stock price is allowed to move, a circuit breaker is triggered.

2. For the index 10%, 15%, or 20% are the circuit breaker triggers.

3. All trading in the equity and equity derivatives market is halted when circuit limits for the index are hit and trading resumes after a period of time depending on the rise or fall when it was halted. The markets then re-open.


4. In India, the circuit limits are set by the Securities and Exchanges Board of India (SEBI).

5. A circuit filter is set up to ensure that there is no extreme price movement and to protect the investors.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)