WHAT IS 'Curbs In'

Curbs in is a phrase indicating that trading curbs are in effect and active on a securities exchange. Curbs are restrictions or limits on trading a specific security, basket of securities or entire market. During curbs in, trading is suspended. When curbs are not in effect it is called "curbs out." 


Curbs in is a term used to signal that trading curbs, called circuit breakers, are currently in effect. Curbs are mechanisms that trigger a halt or suspension of trading of either a specific security or the entire market when a specific volume of loss occurs. Curbs are used in securities markets all across the world. The curbs in effect in the New York Stock Exchange (NYSE) were instituted in 1987 and are codified in the Securities and Exchange Commission Rule 80B. Currently, Rule 80B has three levels of curb, set to halt trading when the S&P 500 Index drops 7 percent, 13 percent or 20 percent.

Some analysts believe that curbs keep the market artificially volatile by causing momentum when the market hits a limit and trading stops, and that if securities and the market were allowed to move freely they would settle into a more consistent equilibrium.

History of Curbs

On October 19, 1987, known as Black Monday, securities markets across the world crashed in a domino effect. In the U.S., the Dow Jones Industrial Average (DJIA), an index that is a general indicator of the state of the stock market and economy as a whole, crashed by 508 points, which was 22.61 percent. In the wake of this crash, then-President Ronald Reagan assembled a committee of experts and tasked them with coming up with guidelines and limits to prevent total market crash again. The committee, called the Brady Commission, determined that the cause of the crash was lack of communication because of a fast market, leading to confusion among traders and freefall of the market. To solve this problem they instituted a device called a circuit breaker, or curb, which would halt trading when the market hit a certain volume of loss. This temporary stop of trading was designed to give the traders space to communicate with each other. The original intention of the circuit breaker was not to prevent dramatic swings in the market, but to give time for this communication.

Since that time, other trading curbs have been instituted and have come in and out of use, including a program trading curbs that lasted for five days in November 2007.

  1. Curbs Out

    Curbs out is a slang term used to signify when trading curbs ...
  2. Curb Trading

    Curb trading occurs outside of general market operations, commonly ...
  3. Stock Market Crash

    A stock market crash is a rapid and often unanticipated drop ...
  4. Fast Market

    A fast market is a condition officially declared by a stock exchange ...
  5. Black Monday

    Black Monday, October 19, 1987, was a day when the Dow Jones ...
  6. Held at the Opening

    Held at the opening is when a security is restricted from trading ...
Related Articles
  1. Investing

    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.
  2. Investing

    4 Consequences of Government Intervention in China's Markets

    Find out how China's intervention in its stock markets has caused unintended consequences that may worsen its economic crisis.
  3. Financial Advisor

    What Was Rule 48?

    Deleted in July 2016, Rule 48 was a tool used by stock market operators to expedite trading in the opening hour during periods of extreme volatility.
  4. Trading

    The Crash Of 1929 - Could It Happen Again?

    Learn about the series of events that triggered the Great Depression.
  5. Insights

    How to Prepare Your Portfolio for a Market Crash

    Being prepared for the next market crash will ensure you survive and perhaps even benefit from it.
  6. Investing

    Did ETFs Cause The Flash Crash?

    On May 6, 2010, the DJIA plunged 998.5 points in twenty minutes. Find out more about what happened that day.
  7. Investing

    The Silver Lining of a Stock Market Crash

    A stock market crash isn't always bad news for investors. Here is the silver lining.
  8. Investing

    1987 Stock Crash, Can It Happen in 2017?

    The end of low interest rates and easy money could lead to a major market decline
  9. Trading

    The Perils Of Program Trading

    The increasing use of program trading makes market glitches inevitable - and sometimes disastrous.
  1. Move from an OTC to a major exchange

    In order to move a company from over-the-counter market to a major exchange, a number of conditions must be met to being ... Read Answer >>
  2. When can you trade the stocks in the Dow Jones Industrial Average (DJIA)?

    Find out when you can trade shares linked to the Dow Jones Industrial Average during NYSE and Nasdaq trading sessions. Read Answer >>
  3. Common examples of marketable securities

    Learn about marketable securities and the most common types of debt and equity securities, including common stock, bonds ... Read Answer >>
  4. How does a stop order and a stop limit order differ?

    Traders use stop orders and stop limit orders as stop losses and regular investors should understand how each type works. Read Answer >>
Trading Center