Circuit Breakers, Sidecars and Volatility Interruptions: What They Mean and When They Trigger (Korea vs US)

What each mechanism stops

Stock markets have several layers of mechanisms that make prices pause for breath when they move too fast. What they stop differs. A circuit breaker halts trading across the whole market, a sidecar briefly delays only institutions' program trading orders, and a volatility interruption (VI) switches a single stock to single-price matching for a moment. On top of these sits the daily price limit on how far a price can move in a day. The names are familiar, but it is easy to mix up which one stops what; reading a 'sidecar triggered' headline as a trading halt is a common mistake.

• Circuit breaker: all trading in the market halted
• Sidecar: only program trading orders paused for 5 minutes
• VI: one stock switched to 2 minutes of single-price matching
• Price limit: trading only within ±30% for the day

Circuit breakers

If KOSPI or KOSDAQ stays 8% or more below the previous close for one minute, stage 1 triggers: trading in that market's stocks and related derivatives stops for 20 minutes, then resumes with 10 minutes of single-price matching. If the index falls 15% or more and at least 1% further than at stage 1, and stays there for a minute, stage 2 triggers the same way. At 20% or more, and at least 1% further than at stage 2, stage 3 ends trading for the day. Each stage can trigger only once a day, and stages 1 and 2 do not trigger in the last 40 minutes (after 2:50 p.m.). They do not apply to rises. In Korea, stage 1 has triggered on both KOSPI and KOSDAQ in March 2020 and on 5 August 2024.

• Stage 1: 8% drop for 1 minute → 20-minute halt + 10 minutes of single-price matching
• Stage 2: 15% drop (1% beyond stage 1) for 1 minute → same
• Stage 3: 20% drop (1% beyond stage 2) → trading ends for the day
• Each stage once a day; stages 1 and 2 not after 2:50 p.m.

Sidecars

A sidecar briefly slows program trading that could spill from a sharply moving futures market into the cash market. On the KOSPI market it triggers when KOSPI 200 futures stay 5% or more above or below the previous close for one minute; on KOSDAQ, when KOSDAQ 150 futures move 6% or more and the KOSDAQ 150 index 3% or more together for one minute. Once triggered, program trading orders are suspended for five minutes and then released automatically. Ordinary orders from individuals keep executing, so the market does not stop. A sidecar on a rise is called a buy sidecar, and on a fall a sell sidecar. It triggers only once a day and operates only from five minutes after the open until 40 minutes before the close.

Volatility interruptions (VI)

A VI applies to individual stocks and comes in two kinds. A dynamic VI triggers when a trade is about to execute at a price far from the last trade in an instant; the threshold is about 3% intraday for KOSPI 200 stocks and 6% for other KOSPI and KOSDAQ stocks, and narrower during the closing auction. A static VI triggers when the price moves 10% or more from the previous close or the last single-price auction. Either way, the stock accepts orders but executes none for two minutes, matches them at a single price, then returns to continuous trading. VIs also operate in the Korea Exchange after-market (4 to 8 p.m.) that opened on 14 September 2026. A VI only means orders piled up on one side at that moment; it is not a signal that the move will continue.

Price limits, limit-up and limit-down

Since 15 June 2015, Korean stocks can move no more than ±30% from the previous close in a day. Prices at those edges are called limit-up and limit-down, and since nothing can execute beyond them, orders can simply pile up. If many buy orders remain at limit-up, the unspent pressure tends to carry into the next day's open; if sell orders pile up at limit-down, holders may be unable to sell even if they want to. Some special trades, such as liquidation trading before delisting, are exempt from the limit. US individual stocks have no such daily limit, so moves of more than 30% the day after earnings do happen.

The US mechanisms

In the US, the market-wide circuit breaker is based on the S&P 500. A 7% fall from the previous close triggers level 1 and a 13% fall level 2, halting trading on all exchanges for 15 minutes if it happens before 3:25 p.m. Eastern Time; a 20% fall triggers level 3 and ends trading for the day. Individual stocks have price bands (limit up-limit down) instead of a daily limit, and a stock that stays outside its band is paused for five minutes. The overnight session US exchanges plan to start on 6 December 2026 comes with separate conditions such as fixed 20% price bands. When following US stocks, remember both that there is no daily cap and that trading can still pause briefly.

How it shows up on charts

Days when these mechanisms kick in leave traces on charts. During a 20-minute circuit-breaker halt, minute charts show missing bars or one long bar bridging the gap, and the single-price match at the restart makes a big candle with heavy volume. A stock hit by a VI has no trades for two minutes and then fills all at once, producing a sudden long bar on the minute chart. On days stuck at limit-up or limit-down, the daily candle can become a flat line with almost no body or wicks. Indicators such as moving averages or RSI give unusual values on such bars, so it is worth checking first which mechanism fired that day. What happens after big declines is covered in the guide on reading crashes and recovery times.

Checking with this site's tools

The Global Markets & FX at a Glance tool shows daily changes for indexes such as KOSPI, KOSDAQ and the S&P 500 alongside the VIX volatility index on one screen, so you can gauge how far an index is from circuit-breaker levels. The Index Crash & Recovery tool shows the depth and recovery time of past large declines, and the Stock Multi Chart lets you put index and stock minute charts side by side to see where bars break on volatile days. Quotes are delayed, so confirm whether a mechanism actually triggered through exchange notices.

Limits and disclaimer

The thresholds and times here summarise Korea Exchange and US Securities and Exchange Commission rules as of October 2026, omit detailed conditions, and can change. Check exchange notices and broker guidance for how they actually apply. These mechanisms only slow sharp moves for a while; they do not prevent losses, and whether one triggers says nothing about the direction ahead. This guide explains the rules and is not investment advice.