Editor’s note: This is general educational information about the different mechanisms that stop trading in US equities. It is not investment advice. It relies on the exchange rule filings and SEC approval orders listed at the end.
Analysis: the March 2020 record argues the halts are not price signals
The most useful evidence about what a circuit breaker does comes from the only occasions on which the modern version has fired. The study the SROs conducted found that since the limit up-limit down plan was implemented there had been only five days on which the S&P 500 fell as much as 6%, all inside the March 9 to March 18, 2020 window. On March 11, 2020 the index fell as much as 6.07% without reaching the 7% Level 1 trigger. On March 16, 2020 it triggered Level 1, reopened, and kept falling to 12.18% down without reaching the 13% Level 2 trigger. On March 9, 12 and 18, 2020 it also declined further after the Level 1 halt, to intraday lows of -8.01%, -9.58% and -9.83%.
The study drew the conclusion that “the market found an equilibrium level that was not particularly tied to the 7% Level 1 trigger or the 13% Level 2 trigger”, and that the available evidence supported a conclusion that the 7% and 13% triggers did not create a magnet effect, the concern that a nearby threshold pulls prices toward it. That is a narrow finding from a small sample, and the exchanges relied on it to make the pilot permanent without changing the levels.
For a reader trying to interpret a stopped stock, the practical separations are cleaner than the rule names suggest. A five-minute pause with no announcement is a volatility band being touched, and it says nothing beyond the fact that the price moved faster than the band allowed. A halt with a stated reason from the listing exchange, particularly news pending, means information is coming and the exchange has decided the market should not trade without it. A halt that clears only when the Primary Listing Market says so, and that stops every venue simultaneously, is regulatory. One confined to a single venue while the stock keeps trading elsewhere is operational, and is a plumbing problem at that venue.
The thing worth checking first is therefore not the size of the price move but which body stopped the trading and on what stated ground. A stock down 12.18% in a market-wide decline and a stock halted for news pending have almost nothing in common except the blank screen.
What the documents say
A stock that stops printing and a market that stops printing look identical on a screen. They are governed by different rules, triggered by different events, decided by different people and lifted on different terms. Confusing them leads readers to draw conclusions about a company from something that had nothing to do with the company, or the reverse.
There are three distinct mechanisms in US equities, and it is worth separating them before looking at any of them in detail: a regulatory halt in one security, an automated volatility pause in one security, and a market-wide circuit breaker that stops everything at once.
A regulatory halt is a decision, made in one place
The first mechanism is discretionary. Under the trading halt rules the exchanges have been harmonizing through 2026, a Regulatory Halt is declared by the Primary Listing Market, defined in the amended CTA and CQ Plans as the national securities exchange on which the security is listed, or where a security is listed on more than one exchange, the exchange on which it has been listed longest.
The defining feature is reach. All self-regulatory organizations have rules requiring them to honour a Regulatory Halt, so a venue trading a security under unlisted trading privileges must halt it too, and may only trade the security once the Primary Listing Market has cleared it to resume. An Operational Halt, by contrast, is effective only on the venue that declares it, and other markets keep trading.
The grounds are specific to the security or its issuer: dissemination of material news, news pending, and the issuer’s ability to meet listing standards, among the reasons enumerated in the exchange rulebooks. In deciding, the Primary Listing Market considers the totality of information available concerning the severity of the issue, its likely duration and its potential impact on members, and consults where feasible with affected trading centers, other plan participants or the securities information processor.
The Cboe BZX filing that took effect in March 2026 adds a further category of Regulatory Halt aimed at data rather than news, covering situations where the loss of consolidated market data, or problems with its accuracy or timeliness, make a halt appropriate. The exchanges note in the same filing that halt rules have not historically been consistent across SROs, so an event that justified a halt in a security listed on one market might not have been grounds for one on another. That inconsistency is what the harmonization is meant to remove.
A limit up-limit down pause is automatic, and nobody declares it
The second mechanism involves no judgment at all. The National Market System plan to address extraordinary market volatility sets price bands around a rolling reference price for every NMS stock. Tier 1 stocks, meaning those in the S&P 500 Index, the Russell 1000 Index and certain exchange-traded products meeting a consolidated average daily volume test above $2,000,000, carry a 5% parameter when the reference price is more than $3.00. Tier 2 stocks, meaning everything else, carry 10%. Both tiers move to 20% for a reference price from $0.75 up to and including $3.00, and to the lesser of $0.15 or 75% below $0.75.
The bands widen at the edges of the session. Between 9:30 a.m. and 9:45 a.m. and again between 3:35 p.m. and 4:00 p.m. Eastern, the percentage parameters are doubled. A new reference price takes effect only when the pro-forma price moves by one percent or more, and each reference price stays in effect for at least 30 seconds.
What follows is mechanical. When one side of the market sits outside the band, the processor flags that quotation as non-executable. When the other side reaches the band, the stock enters a Limit State. If all limit state quotations are executed or canceled within 15 seconds, trading continues. If they are not, the Primary Listing Exchange declares a five-minute trading pause that applies to every market trading the security.
No one has formed a view about the issuer here. The stock hit a number.
The market-wide circuit breaker stops the tape
The third mechanism is indexed to the whole market. The current thresholds date from the 2012 modifications the Commission approved after the events of May 6, 2010, when the markets dropped 9% intraday without reaching the 10% threshold then in force.
Those modifications replaced the Dow Jones Industrial Average with the S&P 500 as the reference index, lowered the triggers to 7% for Level 1, 13% for Level 2 and 20% for Level 3, moved recalculation of the trigger values from quarterly to daily, and shortened the associated halt from 30 minutes to 15 minutes. Timing matters as much as level. A Level 1 or Level 2 trigger hit before 3:25 p.m. halts trading for 15 minutes. The same trigger hit at or after 3:25 p.m. does not stop trading at all. A Level 3 trigger stops trading for the remainder of the day, whenever it occurs. The New York Stock Exchange made the pilot permanent in its Rule 7.12, and the Commission approved that on March 22, 2022.
The rules were not triggered at all until March 2020, when Level 1 halts occurred on March 9, 12, 16 and 18, 2020.
