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. What are the primary risks an investor should consider when investing in the retail ...

    Learn about the primary risks of investing in the retail sector, such as bad economic conditions, regulation, competition ... Read Answer >>
  3. 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 >>
  4. What is Black Monday?

    Monday October 19,1987, is known as Black Monday. On that day, stockbrokers in New York, London, Hong Kong, Berlin, Tokyo ... Read Answer >>
  5. 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 >>
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