Learn · Explainer

Circuit breakers and limit up-limit down

How single-stock price bands and market-wide trading halts work, using the thresholds and design the SEC approved in 2012.

The short answer

Two kinds of official pauses can interrupt U.S. stock trading when prices move far and fast. Limit up-limit down keeps trades in a single listed stock from occurring outside a price band around its recent average. Market-wide circuit breakers can halt trading in all exchange-listed securities when the S&P 500 Index falls by set percentages from the prior day's close. The SEC approved both designs in 2012; current exchange rulebooks are the place to confirm how they are applied now.

Limit up-limit down

In a June 1, 2012 press release, the SEC announced approval of two exchange and FINRA proposals. One established a limit up-limit down mechanism that prevents trades in individual exchange-listed stocks from occurring outside a specified price band. That band is set at a percentage above and below the stock's average price over the immediately preceding five-minute period. In the design the SEC described, the band was 5 percent for more liquid securities (those in the S&P 500 Index, the Russell 1000 Index, and certain exchange-traded products) and 10 percent for other listed securities, with wider bands at the open and the close and for very low-priced stocks. If trading cannot occur inside the band for more than 15 seconds, the plan provides for a five-minute pause.

Market-wide circuit breakers

The second initiative updated market-wide circuit breakers that, when triggered, halt trading in all exchange-listed securities throughout the U.S. markets. The 2012 approval lowered the decline thresholds to 7, 13 and 20 percent from the prior day's closing price, measured on the S&P 500 Index rather than the Dow Jones Industrial Average, and shortened most pauses that do not end the day to 15 minutes. Triggers at or after 3:25 p.m. are treated differently from earlier ones, so a late-day decline can close the market for the rest of the session rather than pause it briefly.

Those figures come from the 2012 approval, which first took effect as a pilot. Anyone checking a live halt should rely on the current exchange and FINRA rules, not on a press release from the year the design was approved.

Limit up-limit down bounds trades in one stock to a band around its recent average price.
A market-wide circuit breaker can pause or close trading in all exchange-listed stocks after a large drop in the S&P 500.
The 7%, 13% and 20% thresholds, and the 5% and 10% single-stock bands, are the levels described in the SEC's 2012 approval.

Common questions

What is a market-wide circuit breaker?

A halt of trading in all exchange-listed securities when the S&P 500 Index falls by a set percentage from the prior day's close. The SEC's 2012 approval described thresholds of 7, 13 and 20 percent.

What is limit up-limit down?

A mechanism that prevents trades in an individual listed stock from occurring outside a price band around its average price over the prior five minutes.

Do the two rules start at the same time?

No. Limit up-limit down is stock-specific and can pause one name. A market-wide circuit breaker, when triggered, reaches every exchange-listed security.

Why does 3:25 p.m. matter?

The 2012 design simplified the clock into two periods: declines before 3:25 p.m. and those at or after 3:25 p.m. A late trigger can end trading for the day rather than pause it.

Are these still the current numbers?

They are the thresholds the SEC described when it approved the design in 2012. Confirm the live rules with the exchanges and FINRA before relying on a figure in a fast-moving session.

Disclosures

Editor holdings: The editor holds no position in any company named on this page. As of Nov 11, 2026.
Compensation: Nobody paid for this page. No affiliate links on this page.
Sources: Each company's own SEC filings, linked next to each number.
Last updated: Nov 10, 2026

General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.

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