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.

  1. Disruptive Innovation

    A disruptive innovation is a new use for a technology that breaks ...
  2. Disruptive Technology

    Disruptive technologies are those that significantly alter the ...
  3. Panic Selling

    Wide-scale selling of an investment, causing a sharp decline ...
  4. SSE Composite

    The SSE Composite is a market composite made up of all the A-shares ...
  5. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade ...
  6. Trading Halt

    A trading halt is a temporary suspension in the trading of a ...
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. Financial Advisor

    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.
  3. 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.
  4. Trading

    The Crash Of 1929 - Could It Happen Again?

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

    Which Industries Can Produce the Next Amazon-Like Stock? (AMZN)

    Learn about three industries that are ripe for disruption and have the potential to produce a company with the growth characteristics of
  6. Investing

    Why The 1929 Stock Market Crash Could Happen In 2018

    Sound the alarm: per Nobel Laureate Robert Shiller's CAPE ratio, U.S. stocks are pricier than before the 1929 crash.
  7. Insights

    Is A Market Crash Around the Corner?

    With the right diversification and risk, your investment portfolio will weather any market crash.
  8. Insights

    The Long View on China's Recent Stock Meltdown

    China's bull market was fueled by a widespread belief that the government’s economic reforms were a success and a sign that President Xi Jinping’s dream of a prosperous China was becoming a reality. ...
  9. Investing

    Vanguard Says Investors Didn't Panic When Markets Tanked

    Vanguard said that investors didn't panic earlier in the month when stocks plummeted.
  1. Tame Panic Selling with the Exhausted Selling Model

    Discover what the exhausted selling model is and how it can be used by traders who are looking to profit from the panic sale ... Read Answer >>
Hot Definitions
  1. Liquidity

    Liquidity is the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's ...
  2. Federal Funds Rate

    The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve ...
  3. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
  4. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  5. Entrepreneur

    An entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture.
  6. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
Trading Center