Stock market halted after S&P SL20 drops over 7.7-pct

Colombo Stock Exchange (CSE) on Tuesday halted its trading for 30 minutes due to the S&P SL20 index dropping over 7.7% from the previous close. The CSE said the halt will be lifted at 2.17 p.m.

Regular trading was halted for 30 minutes earlier in the day as well after the S&P SL20 index dropped by 5% during the trading session.

Last year, the Securities and Exchange Commission introduced a Three Tiered Circuit Breaker structure attached to the S&P SL20 Index in order to eradicate distortion in the S&P SL20 Index by providing a layered approach.

Three-Tiered Circuit Breaker Structure

i. First Circuit Breaker – After the commencement of trading of the Colombo Stock Exchange (CSE) for the day, a Market Halt to be imposed for 30 minutes in the event the S&P SL20 index drops by 5%.

ii. Second Circuit Breaker – Having re-commenced trading after the cooling-off period of 30 minutes following the S&P SL20 drop of 5%, if the S&P SL20 index drops again by another 2.5%, a Market Halt to be imposed for another 30 minutes.

iii. Third Circuit Breaker – Upon re-commencing trading subsequent to cooling off period of 30 minutes following the S&P SL20 drop of 2.5% (altogether S&P SL20 has dropped by 7.5%) if the S&P SL20 index drops by a further 2.5% (S&P SL20 index has fallen altogether by 10% for the day), trading will be halted and the market shall be closed for the day.