SGX to introduce circuit breakers
13 June 2013 Singapore
Image: Shutterstock
Singapore Exchange (SGX) is consulting the public on proposed circuit breakers for the securities market.
It is proposing the introduction of circuit breakers to 鈥渟afeguard against disorderly trading鈥�, according to an SGX statement.
It pointed to circuit breakers in operation in Australian, UK and US exchanges that also 鈥渟eek to address sharp price movements in a traded instrument within a short period and give the market time to take stock of the situation鈥�.
Under its proposal, SGX will operate a circuit breaker comprising a price band of +/-10 percent of the price of an instrument.
The price band will adjust to reflect the traded price of the instrument.
If a trade is attempted at a price that is outside of the price band, the circuit breaker will trip, activating a five-minute cooling-off period. Trading can continue during this period, as long as it鈥檚 within the constant price band.
Once the cooling-off period ends, the price band will be adjusted to reflect changes in the price of the instrument.
SGX is seeking comments from the public on a number of matters, including: the proposed range of instruments and markets to which circuit breakers will apply; the operation of the price band; and the treatment of related instruments under SGX鈥檚 proposed circuit breaker model.
The public has until 3 July to provide comments to the consultation paper, which is available through the exchange's website. SGX plans to introduce circuit breakers by the end of 2013 subject to regulatory approval and industry readiness.
It is proposing the introduction of circuit breakers to 鈥渟afeguard against disorderly trading鈥�, according to an SGX statement.
It pointed to circuit breakers in operation in Australian, UK and US exchanges that also 鈥渟eek to address sharp price movements in a traded instrument within a short period and give the market time to take stock of the situation鈥�.
Under its proposal, SGX will operate a circuit breaker comprising a price band of +/-10 percent of the price of an instrument.
The price band will adjust to reflect the traded price of the instrument.
If a trade is attempted at a price that is outside of the price band, the circuit breaker will trip, activating a five-minute cooling-off period. Trading can continue during this period, as long as it鈥檚 within the constant price band.
Once the cooling-off period ends, the price band will be adjusted to reflect changes in the price of the instrument.
SGX is seeking comments from the public on a number of matters, including: the proposed range of instruments and markets to which circuit breakers will apply; the operation of the price band; and the treatment of related instruments under SGX鈥檚 proposed circuit breaker model.
The public has until 3 July to provide comments to the consultation paper, which is available through the exchange's website. SGX plans to introduce circuit breakers by the end of 2013 subject to regulatory approval and industry readiness.
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