What is a circuit breaker?

It is a system to curb excessive speculation in the stock market, applied by the stock exchange authorities, when the index spurts or plunges by more than a fixed limit. Trading is then suspended for some time to let the market cool down. If the market changes more than 10%, trading is halted for one hour, more than 15% trading is suspended for 2 hours. Although introduced in November 1992, it was used for the first time in the Bombay Stock Exchange on Tuesday, 9 March 1993 when the Sensex declined by more than 5% from the opening level, i.e. from 2451.20 to 2318.26. At that time, the circuit was 5%.