A trading curb, also known as a circuit breaker, is a point at which a stock market will stop trading for a period of time in response to substantial drops in value. There is no circuit breaker mechanism on the upside which would prevent speculative gains, therefore the trading curb is a form of institutionalized bubble bias.
On the New York Stock Exchange (NYSE), one type of trading curb is referred to as a "circuit breaker." These limits were put in place after Black Monday in order to reduce market volatility and massive panic sell-offs, giving traders time to reconsider their transactions.
At the start of each quarter, the NYSE sets three circuit breaker levels at levels of 7% (Level 1), 13% (Level 2), and 20% (Level 3) of the average closing price of the S&P 500 for the month preceding the start of the quarter, rounded to the nearest 50-point interval. For example, during the first quarter of 2014, these levels were 126 points, 234 points, and 360 points, respectively. Depending on the point drop that happens and the time of day when it happens, different actions occur automatically: Level 1 and Level 2 declines result in a 15-minute trading halt unless they occur after 3:25pm, when no trading halts apply. A Level 3 decline results in trading being suspended for the remainder of the day.
Trading curbs on Dow futures contracts traded on the Chicago Board of Trade are based on NYSE levels, with the exception that only the 10% threshold is in effect outside of regular NYSE trading hours, and is relative to the previous daily settlement price.
On October 27, 1997, under different trading curb rules then in effect, trading at the New York Stock Exchange was halted early after the Dow Jones Industrial Average declined by 550 points. This is the only time US stock markets have closed early due to trading curbs.
Program trading curbs
The NYSE formerly implemented a curb on program trading under certain conditions. A program trade is defined by the NYSE as a basket of stocks from the S&P 500 where there are at least 15 stocks or where the value of the basket is at least $1 million. Such trades are generally automated.
When activated, the curbs restricted program trades to sell on upticks and buy only on downticks.
The trading curbs would become activated whenever the NYSE Composite Index moved 190 points or the Dow Jones Industrial Average moved 2% from its previous close. They remained in place for the rest of the trading day or until the NYSE Composite Index moved to within 90 points or the Dow moved within 1% of the previous close.
Since over 50% of all trades on the NYSE are program trades, this curb was supposed to limit volatility by mitigating the ability of automated trades to drive stock prices down via positive feedback.
This curb was fairly common, and financial television networks such as CNBC often referred to it with the term "curbs in."
On November 7, 2007, the NYSE confirmed that the exchange has scrapped this rule as of November 2. The reason given for the rule's elimination was its ineffectiveness in its purpose of curbing market volatility since it was enacted in the wake of the 1987 stock market crash under the belief that it may help prevent another catastrophic market crash.
In Japan, the stock trading will be halted if in cases where the criteria for the CB trigger are met. The trading halt time is 10 minutes.
A "circuit-breaker" mechanism began test run on Jan 1st, 2016. If the CSI 300 Index rises or falls by 5% before 14:45 (15 minutes before normal closing), stock trading will halt for 15 minutes. If it happens after 14:45 or the Index change reaches further to 7% at any time, trading will close immediately for the day. "Full breaking" has been triggered on Jan 4th and 7th. On Jan 7th the use of circuit-breaker was suspended. 
- Stock market crash
- Trading halt
- 2010 Flash Crash, after which the SEC announced a trial period of per-stock trading curbs
- Design of Financial Market Regulations against Large Price Fluctuations Using by Artificial Market Simulations
- NYSE official circuit-breaker levels
- Report by the Division of Market Regulation of the U.S. Securities and Exchange Commission
- Reuters report on trading curbs elimination
- "Price Limits/ Circuit Breaker Rule". JPX. Retrieved January 4, 2016.
- "China share trading halted after 7% plunge". BBC. 4 January 2016. Retrieved 4 January 2016.
- Circuit Breakers and Other Market Volatility Procedures
- Circuit Breakers and Trading Collars at the New York Stock Exchange
- Dow Contracts Price Limits and Trading Halts at the Chicago Board of Trade
- Program trading curbs