Circuit Breaker (Market-Wide)

A market-wide circuit breaker (MWCB) is a coordinated, cross-exchange halt of all US equity trading triggered when the S&P 500 falls a set percentage from the prior session's close. Its purpose is to interrupt a cascading sell-off, give participants time to absorb information, and restore orderly two-sided markets.

There are three tiers, measured against the prior close: a Level 1 (7%) or Level 2 (13%) decline before 3:25 PM ET triggers a 15-minute market-wide halt (only once each per day); a Level 3 (20%) decline at any time halts trading for the remainder of the session. After 3:25 PM, Level 1 and 2 no longer apply — only a Level 3 can halt the close.

Don't confuse this with single-stock LULD halts, which pause one security on its own volatility. MWCBs are system-wide and rare: the current framework was rebuilt after the 2010 Flash Crash, and the Level 1 7% breaker fired multiple times during the March 2020 COVID crash. CME equity-index futures use aligned 7%/13%/20% limits so the futures and cash markets halt in sync.