SGX to introduce circuit breakers
24 January 2014 Singapore
Image: Shutterstock
Singapore Exchange will introduce circuit breakers in the securities market from 24 February as an additional market safeguard.
Circuit breakers will initially apply to Straits Times Index and MSCI Singapore Index component stocks and all those securities priced $0.50 and above.
This will also include stapled securities, funds, exchange-traded funds, exchange-traded notes and extended settlement contracts. These securities account for about 80 percent of trading on the Singapore stock market.
Circuit breakers will be triggered when a potential trade is matched at a price that is more than 10 percent away from the reference price. The reference price is the last traded price at least five minutes earlier.
Once a circuit breaker is triggered, a five-minute cooling-off period follows where trading can only take place within a price band 10 percent above or below the reference price. Thereafter, trading will resume with a new reference price as established during the cooling-off period.
In addition, SGX will revise its error trade policy effective 24 February. For all securities except bonds, trades will not be cancelled if the transacted price falls within a price range of 20 minimum bid sizes, or 5 percent, from the last traded price.
Muthukrishnan Ramaswami, president of SGX, said: “The introduction of circuit breakers and the new error trade policy will assure investors of continued safety and transparency even under volatile market conditions. The implementation of these two initiatives will complement our existing safeguards in support of a fair, orderly and transparent market.”
Circuit breakers will initially apply to Straits Times Index and MSCI Singapore Index component stocks and all those securities priced $0.50 and above.
This will also include stapled securities, funds, exchange-traded funds, exchange-traded notes and extended settlement contracts. These securities account for about 80 percent of trading on the Singapore stock market.
Circuit breakers will be triggered when a potential trade is matched at a price that is more than 10 percent away from the reference price. The reference price is the last traded price at least five minutes earlier.
Once a circuit breaker is triggered, a five-minute cooling-off period follows where trading can only take place within a price band 10 percent above or below the reference price. Thereafter, trading will resume with a new reference price as established during the cooling-off period.
In addition, SGX will revise its error trade policy effective 24 February. For all securities except bonds, trades will not be cancelled if the transacted price falls within a price range of 20 minimum bid sizes, or 5 percent, from the last traded price.
Muthukrishnan Ramaswami, president of SGX, said: “The introduction of circuit breakers and the new error trade policy will assure investors of continued safety and transparency even under volatile market conditions. The implementation of these two initiatives will complement our existing safeguards in support of a fair, orderly and transparent market.”
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