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.

RELATED TERMS
  1. Disruptive Innovation

    A technology whose application significantly affects the way ...
  2. Disruptive Technology

    A technology that significantly alters the way that businesses ...
  3. Crash

    A sudden and significant decline in the value of a market. A ...
  4. Panic Selling

    Wide-scale selling of an investment, causing a sharp decline ...
  5. Panic Buying

    A type of behavior marked by a rapid increase in purchase volume ...
  6. Circuit Breaker

    Circuit breakers are measures approved by the SEC to curb panic-selling ...
Related Articles
  1. Investing

    Understanding Disruption

    Disruption’s concept comes from the term creative destruction, coined by Austrian economist Joseph Schumpeter in 1942, who called it one of the essential elements of capitalism. The term was ...
  2. Investing News

    Why China Is Suspending Market Circuit Breakers

    Chinese regulators have announced that beginning on January 8th, circuit breakers used to halt its stock markets will be suspended in order to "smooth" trading operations.
  3. Stock Analysis

    Is the Stock Market Crashing? 5 Signs to Consider

    Learn about some signs of a potential stock market crash including a high level of margin debt, lots of IPOs, M&A activity and technical factors.
  4. Term

    What's a Circuit Breaker?

    A circuit breaker is a measure taken during large stock exchange selloffs to avert panic selling.
  5. Budgeting

    Market Crashes: What are Crashes and Bubbles?

    By Andrew BeattieA bubble is a type of investing phenomenon that demonstrates the frailty of some facets of human emotion. A bubble occurs when investors put so much demand on a stock that they ...
  6. Investing News

    4 Consequences of Government Intervention in China's Markets

    Find out how China's intervention into its stock markets has caused unintended consequences that may be worsen its economic crisis.
  7. Personal Finance

    How Technology Is Quickly Disrupting the Insurance Industry

    As the insurance industry struggles to deal with the growing pains of a rapidly evolving tech-driven market, opportunities for disruption manifest.
  8. Investing

    One Thing to Never Do When the Stock Market Goes Down

    We could all use a little reminder.
  9. Active Trading

    Connecting Crashes, Corrections And Capitulation

    Even though crashes, corrections and capitulations are bad news for investors holding the stock, there are still ways to profit.
  10. Investing News

    Cybercrime: #1 Disruptive Threat to Markets? (JPM)

    Discover why asset managers see cybercrimes as the most disruptive threat facing financial markets and learn what is being done to protect your data.
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 >>
  6. 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 >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center