Circuit breaker

Circuit breaker

Part of: GS Prelims and GS-III- Economy & Science & Technology

In News:

• It was introduced by SEBI in 2001 to prevent crashes in Stock Exchange Market
• Circuit breakers are triggered to prevent markets from crashing, which happens when market participants start to panic induced by fears that their stocks are overvalued and decide to sell their stocks.
• This index-based market-wide circuit breaker system applies at three stages of the index movement, at 10, 15 and 20%
• When triggered, these circuit breakers bring about a coordinated trading halt in all equity and equity derivative markets nationwide.