{"id":2590,"date":"2023-02-03T08:16:18","date_gmt":"2023-02-03T02:46:18","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=2590"},"modified":"2025-03-25T22:44:28","modified_gmt":"2025-03-25T17:14:28","slug":"what-is-a-circuit-breaker-in-trading","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-a-circuit-breaker-in-trading\/","title":{"rendered":"What is a Circuit breaker in Trading?"},"content":{"rendered":"<h2>About Circuit breaker in Trading:<\/h2>\n<ul>\n<li>The <strong>Securities and Exchange Board of India<\/strong> (SEBI) implemented index-based market-wide circuit breakers in June 2001.<\/li>\n<li>Circuit breakers are triggered to <strong>prevent markets from crashing<\/strong> due to a panic-induced sale of stocks.\u00a0<\/li>\n<li>This can occur for a variety of reasons, leading to stockholders in the market believing that their stocks are overvalued. As a result, they engage in a sell-off.<\/li>\n<li>Circuit breakers <strong>temporarily halt trading<\/strong>, thereby halting the sell-off.<\/li>\n<li>Circuit-breakers effectively limit how much a stock&#8217;s value can fall in a single day\/trading session, resulting in a more stable market overall.<\/li>\n<\/ul>\n<h3>How do these work?<\/h3>\n<ul>\n<li>This index-based market-wide circuit breaker system applies <strong>at three stages<\/strong> of the index movement, at 10, 15 and 20 per cent.<\/li>\n<\/ul>\n<p>When triggered, these circuit breakers bring about a coordinated trading halt in <strong>all equity and equity derivative<\/strong> markets nationwide.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1) What is the equity derivative?<\/h3>\n<p>An equity derivative is a financial instrument whose value is based on the equity movements of the underlying asset.<\/p>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/circuit-breaker-8420164\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>Most Adani stocks hit lower circuits again: What is a circuit breaker in the stock market?<\/u><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Circuit breakers are triggered to prevent markets from crashing due to a panic-induced sale of stocks.<\/p>\n","protected":false},"author":5,"featured_media":2591,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-2590","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2590","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=2590"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/2590\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/2591"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=2590"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=2590"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=2590"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}