Circuit breaker is a financial regulatory instrument that
is in place to prevent stock market crashes from
occurring. Circuit breakers have been modified to prevent both speculative
gains and dramatic losses within a small time frame. As a result of it being
triggered, circuit breakers either stop trading for a certain minutes or close
trading for entire day.
The main
objective of circuit break is to control the stock market movements for
unreasonable fluctuations. Trading halt gives market participants time to
analyze event, news, announcements and take necessary rational decision.
