The Bombay Stock Exchange in a media release on Tuesday said that it implements, on a quarterly basis (SEBI circular SMDRPD/Policy/Cir-37/2001 dated June 28, 2001) the index-based marketwide circuit breaker system.
The system is applicable at three stages of the index movement either way at 10%, 15% and 20%. This circuit breaker brings about a coordinated trading halt in all equity and equity derivative markets nationwide.
When will circuit breakers kick in
The market wide circuit breakers would be triggered by movement of either Sensex or the NSE S&P CNX Nifty whichever is breached earlier.
In case of a 10 per cent movement of either of these indices, there would be a one-hour market halt if the movement takes place before 1 p.m.
In case the movement takes place at or after 1 p.m. but before 2.30 p.m. there will be a trading halt for 30 minutes.
In case the movement takes place at or after 2.30 p.m. there will be no trading halt at the 10 per cent level and the market will continue trading.
In case of a 15 per cent movement of either index, there will be a 2-hour market halt if the movement takes place before 1 p.m.
If the 15 per cent trigger is reached on or after 1 p.m. but before 2 p.m., there will be a 1 hour halt. If the 15 per cent trigger is reached on or after 2 p.m. the trading will halt for the remainder of the day.
In case of a 20 per cent movement of the index, the trading will be halted for the remainder of the day.
Calculation
The percentages are calculated on the closing index value of the quarter. These percentages are translated into absolute points of index variations (rounded off to the nearest 25 points in case of Sensex).
At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarter.
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