NYSE Circuit Breakers Adopted
In October 1988, one year after Black Monday, the NYSE and SEC jointly adopted market-wide trading halts. The original thresholds were later restructured into three tiers tied to the S&P 500. A 7 percent intraday decline triggers a 15-minute Level 1 halt. A 13 percent drop produces a second 15-minute Level 2 halt. A 20 percent decline closes the market for the remainder of the session. The framework has been refined but not replaced for 38 years.
Circuit breakers have been triggered only a handful of times since 1988 — notably four times in a single week in March 2020 during the COVID crash. They worked as intended, buying the Fed time to intervene.
04 · Circuit Breakers
Black Monday's 22.6% single-day drop exposed the fragility of fully-electronic, program-driven markets. The NYSE responded within a year — an unusually fast turnaround, precisely because the 1987 crash did not turn into a recession.
Read the full era →