What Is the Purpose of a “Kill Switch” or Circuit Breaker in an Automated Quoting System?

The kill switch is a critical risk management tool designed to immediately halt all trading activity in an emergency. Its purpose is to prevent catastrophic losses due to system malfunctions, erroneous quotes, or extreme market volatility.

It can be triggered automatically by predefined risk thresholds or manually by an operator. A robust circuit breaker provides a safety net against "fat finger" errors or runaway algorithms.