Shock Absorber

This Issue in United States

Concept of Shock Absorber in Futures Trading

In this context of financial law, the following is a definition of Shock Absorber: A temporary restriction in the trading of certain stock index futures contracts that becomes effective following a significant intraday decrease in stock index futures prices. Designed to provide an adjustment period to digest new market information, the restriction bars trading below a specified price level. Shock absorbers are generally market specific and at tighter levels than circuit breakers.