SET tweaks circuit-breaker rules

SET tweaks circuit-breaker rules

Trading can be halted if index loses just 8%, compared with 10% normally

Stock market on March 13. (File photo)
Stock market on March 13. (File photo)

The Securities and Exchange Commission (SEC) has approved a Stock Exchange of Thailand (SET) request to reduce the threshold for triggering the first circuit breaker to an 8% loss from 10%, aiming to prevent excessive stock market plunges linked to the global coronavirus pandemic.

The bourse has also revised the ceiling and floor limits of securities products traded on the SET index, the Market for Alternative Investment (MAI) index and Thailand Futures Exchange (TFEX).  

The revised regulations will take effect tomorrow and run until June 30.

The mandate came after Wall Street indices collapsed in their worst day since 1987, with the S&P 500 and Nasdaq dropping about 12% and the Dow sinking nearly 13%.

The Philippines, meanwhile, became the first country to shut down its stock market as the country goes into lockdown until further notice.

The SET on Tuesday had a relatively calm day by recent standards, trading in a narrower range between 1,035.17, which was also its closing level, and 1,068.47, in turnover worth 67.13 billion baht. The index closed down 10.91 points from the day before.

SET executives held an emergency meeting late Monday and finalised the new circuit breaker regulations before seeking the SEC’s approvaly, according to an anonymous source from the SEC.

A circuit breaker will be triggered under three stages. In the first stage, equity trading will be halted for 30 minutes if the SET index falls by 8%, down from the previous 10%. 

Trading will be halted for another 30 minutes if the SET index plunges by 15%, a revision from a 60-minute intermission for a 20% decline.

If the SET index continues to plummet by 20%, trading will be halted for 60 minutes under the third stage.

The ceiling and floor limit for stocks, investment units, warrants, derivative warrants, exchange-traded funds, treasury stocks and depository receipts traded on the SET and MAI indices have been revised to plus/minus of 15% from 30% of the previous closing share prices.

The ceiling and floor limit for foreign shares traded on the SET and MAI indices have been revised to plus/minus 30% from 60%.

For index futures, options, sector futures and single stock futures traded on the TFEX, the ceiling and floor limit for these securities have been revised to plus/minus 15% from 30%.

On the morning of March 13, trading on the SET was halted for a second straight day, as a circuit breaker was triggered after a 10% plunge.

It was only the fifth time in history for a circuit breaker to be activated to curb excessive volatility in Thailand’s equity market, coming right after Thursday afternoon, when the pandemic panic and plunging crude prices triggered the fourth-ever halt.


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