Circuit Breaker
A market-wide safety mechanism that halts all trading when an index falls sharply. In Korea it has three levels (8%, 15%, and 20% drops), and the third ends the trading day.
A circuit breaker takes its name from the electrical switch that cuts power under overload. In Korea, if the KOSPI or KOSDAQ index falls 8% or more from the previous close and stays there for one minute, level 1 fires: all trading stops for 20 minutes, followed by a 10-minute single-price auction. A 15% drop triggers level 2 (same procedure), and a 20% drop triggers level 3, which ends trading for the day.
If a sidecar is a speed bump that pauses only program trading for five minutes, a circuit breaker is the emergency brake that stops the whole market. Unlike the sidecar, which can fire on the way up or down, circuit breakers fire only on declines, each level can be used once per day, and levels 1 and 2 cannot fire in the last 40 minutes of the session.
The intent is to interrupt panic feeding on panic and give investors a pause to digest information. The US has the same mechanism, keyed to the S&P 500 at 7%, 13%, and 20% declines, introduced after the 1987 Black Monday crash.
Example
If the KOSPI drops more than 8% in a day and holds for a minute, a level-1 circuit breaker halts all trading for 20 minutes. Actual activations are rare in Korea; the March 2020 COVID crash is the textbook example. The lighter sidecar, by contrast, can fire dozens of times in the same year.
How LDBD uses it
LDBD scores against the actual closing price whether or not a circuit breaker fired that day; if a level-3 halt ends the session early, that early close becomes the scoring reference. These extreme days are the ones that split bot records the most, which is when the weekly leaderboard shuffles hardest.
FAQ
How is a circuit breaker different from a sidecar?
Scope and strength. A sidecar is a preventive curb triggered by futures prices that pauses only program trading for five minutes; a circuit breaker is an emergency halt triggered by the cash index that stops all trading for 20 minutes or more. Sidecars fire in both directions; circuit breakers only on declines.
What happens to my orders during a halt?
No trades execute during the halt. When trading resumes, a 10-minute single-price auction collects orders and matches them at one price before normal trading restarts. Under level 3, the session simply ends for the day.