Markets Revise Trading Rules, Hours, Circuit Breakers As Volatility Surges: Key Facts

Markets Revise Trading Rules, Hours, Circuit Breakers As Volatility Surges: Key Facts

MUMBAI:

Global exchanges are changing trading rules to protect their markets from intense volatility and speculative trading as the coronavirus pandemic threatens the world economy.

Many markets have shortened trading hours, and others are mulling whether to follow suit.

Here are some of the measures taken by exchanges across the world so far:

Asia

India

The Reserve Bank of India cut trading hours for bonds and foreign exchange to four hours between April 7 to 17

India’s market regulator halved position limits for certain stock futures, restricted short-selling of index derivatives and raised margin rates for some shares in a bid to curb “abnormally high” volatility.

The measures went into effect on March 23 and are set to continue for one month

Philippines

On March 17, the Philippines became the first country to suspend trade only to reopen later that week after the government exempted financial trading platforms from a strict coronavirus quarantine procedures.

Thailand

The country revised its circuit breaker rules that will last until the end of June

New rules will see a 8 per cent drop trigger a 30-minute halt in trade; a 15 per cent fall to initiate a 30-minute halt, while a 20 per cent plunge will see it halted for an hour

South Korea

Earlier in March, South Korea tightened short-selling rules for three months from March 11

Stocks with a sudden and abnormal increase in short-selling transactions will be suspended from further short-selling for 10 days, compared with a the current limit of one day

Stocks on the KOSPI that drop 5 per cent or more and where daily short-selling transactions are up by three or more times the average of the previous 40 days will be subject to the new rule

Indonesia

The country’s central bank and financial regulator to cut trading hours for the currency and stock markets

The stock exchange tightened circuit breaker rules, where a more than 5 per cent drop on its main stock index will see trading halted by 30 minutes, compared with the 10 per cent previously

If the index’s losses extend to 10 per cent when trading resumes, it will be halted for a further half hour

The exchange has also changed mechanisms for individual stock prices, and trading will now be halted if there is a 10 per cent move, down from a previous 20-35 per cent

There is also a ban on short-selling: the exchange removed all stocks on a list where it was allowed until further notice

Europe

Austria

The financial markets regulator banned short-selling on the Vienna stock exchange until April 18

Greece

The country’s securities regulator banned short-selling on the Athens stock exchange until April 24 to shield the equities market from volatility

Italy

From March 17, market regulator Consob suspended short-selling on the Milan stock market for three months.

Spain

Imposed a one-month ban on short-selling, which it said could be extended.

France

France banned short-selling on 92 stocks on March 17

Turkey

A ban on short selling has been in place in Turkey since late February following an air strike that killed dozens of Turkish troops

Africa

South Africa

The Johannesburg Stock Exchange decided against shortening trading hours, but its head said JSE would strictly enforce rules prohibiting uncovered, or naked short-selling and lengthen the mandatory halts to trading circuit breakers.

Middle East

United Arab Emirates

Shares in the United Arab Emirates stock exchanges will be allowed to drop a daily maximum of 5 per cent from their previous day closing price, state news agency WAM reported.


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