Market Disruption

DEFINITION of 'Market Disruption'

A situation where markets cease to function in a regular manner, typically characterized by rapid and large market declines. Market disruptions can result from both physical threats to the stock exchange or unusual trading (as in a crash). In either case, the disruption creates widespread panic and results in disorderly market conditions.

BREAKING DOWN 'Market Disruption'

Following the 1987 market crash, systems were put in place to minimize the risks associated with market disruptions, including circuit breakers and price limits. These systems are designed to halt trading in rapidly declining markets to avoid panic conditions.

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RELATED FAQS
  1. What happens when a circuit breaker is put into effect?

    A circuit breaker represents a situation where the Securities and Exchange Commission (SEC) and National Association of Securities ... Read Answer >>
  2. How do investors lose money when the stock market crashes?

    Over the last hundred years, there have been several large stock market crashes that have plagued the American financial ... Read Answer >>
  3. What caused the stock market crash of 1929 that preceded The Great Depression?

    Find out what led to the stock market crash of 1929, which in turn led to the Great Depression. It sparked a nearly 90% loss ... Read Answer >>
  4. What caused Black Monday, the stock market crash of 1987?

    Find out about the factors behind the stock market crash of 1987, also known as Black Monday, when the Dow Jones Industrial ... Read Answer >>
  5. Will technology ever disrupt the role of the custodian bank?

    Learn why some consider new trading and account technology a disruptive threat to custodian banking and how banks are adapting ... Read Answer >>
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    Find out about the long-term outlook for the automotive sector and the impact of technologies such as self-driving cars and ... Read Answer >>
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