Friday, September 11, 2015

Market-wide Circuit Breaker In NSE & BSE

Market-wide Circuit Breaker is a measure employed by stock exchanges to prevent extreme volatility in the markets by halting trade for a defined time frame when the broad market index rises or falls by a certain percentage over the previous day closing level of the index.

In India, the index-based market-wide circuit breakers are deployed at 3 stages of the index movement, either way viz. at 10%, 15% and 20%. The market wide circuits are applicable to both the equity and equity derivative markets.

The circuit breakers are triggered by movement of either the BSE Sensex or the NSE Nifty, whichever is breached earlier. Once the circuit is breached, both the markets namely the NSE and the BSE will halt trading for the per-defined time frame.

Post each halt triggered by a market wide circuit breaker, the market shall re-open with a pre-open call auction session.

The following table captures the duration of the market halt and pre-open session:

Trigger limitTrigger timeMarket halt durationPre-open call auction session post market halt
10%Before 1:00 pm.45 Minutes15 Minutes
At or after 1:00 pm upto 2.30 pm15 Minutes15 Minutes
At or after 2.30 pm No haltNot applicable
15%Before 1 pm1 hour 45 minutes15 Minutes
At or after 1:00 pm before 2:00 pm45 Minutes15 Minutes
On or after 2:00 pmRemainder of the dayNot applicable
20%Any time during market hoursRemainder of the dayNot applicable

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