Hard-hit Singapore Exchange to implement 'safeguards'
Under the proposal, trading of a stock will be halted for five minutes if it moves 10 per cent in either direction, the exchange said. It had sought public feedback on the plan in June.
"We aim to introduce the dynamic circuit-breakers by early next year, subject to regulatory approvals," spokeswoman Joan Lew said.
The exchange imposed restrictions last week on the shares of Blumont Group, Asiasons Capital and LionGold after they plunged.
Trading caps to prevent wild swings in the stocks will give investors time to assess their holdings, according to trading network Liquidnet Holdings and the Securities Investors Association of Singapore, the largest investor lobbying group in Asia.
Circuit-breakers are "safeguards other markets have to allow time for investors to mull over the situation at hand to see if the information out there is sufficient to make an informed decision," SIAS president David Gerald said. "Investors will have an opportunity to quickly review their investment decision."
Regulators worldwide have evaluated safeguards since a May 2010 plunge briefly erased about $US862 billion from the value of US equities. They have stepped up oversight of capital markets overall following the global financial crisis in 2008.
Frequently Asked Questions about this Article…
Circuit-breakers are mechanisms used in stock trading to temporarily halt trading of a stock if its price moves significantly in either direction. This pause allows investors time to assess the situation and make informed decisions.
The Singapore Exchange is implementing circuit-breakers to prevent wild swings in stock prices, as seen in the recent plunge of shares in three commodity companies. This measure aims to give investors time to evaluate their holdings and make informed decisions.
On the Singapore Exchange, a circuit-breaker will halt trading of a stock for five minutes if its price moves 10% in either direction. This is designed to provide a pause for investors to reassess their positions.
The Singapore Exchange plans to introduce the circuit-breakers by early next year, pending regulatory approvals.
The recent stock price plunge on the Singapore Exchange affected Blumont Group, Asiasons Capital, and LionGold, leading to the implementation of trading restrictions.
Trading caps are used to prevent extreme volatility in stock prices, allowing investors time to assess their investments and make informed decisions, thereby maintaining market stability.
Circuit-breakers benefit everyday investors by providing a pause during significant price movements, allowing them to review and adjust their investment strategies based on the latest information.
Global regulators began evaluating stock market safeguards following a significant market plunge in May 2010, which briefly erased about $US862 billion from the value of US equities, highlighting the need for better oversight.
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