May, 1, 2020
The Securities and Exchange Commission of Sri Lanka (SEC) has introduced a system that automatically halts trading and close the market for the day if the S&P SL20 index drops by 10% .
The circuit breaker mechanism will take effect from the date the market re-opens and remain in force until further notice.
The three Tiered Circuit Breaker Structure is as follows;
The SEC said that it has deemed it necessary to amend the current methodology by introducing a Three Tiered Circuit Breaker structure having taken in to consideration the prevailing market conditions.
“Accordingly, a Three Tiered Circuit Breaker structure is hereby introduced in order to strengthen the capital market and ensure that precautionary measures are in place to eradicate distortion in the S&P SL20 Index by providing a layered approach.”
The SEC has directed the CSE to implement the Three Tiered Circuit Breaker structure from the date the market re-opens and said that it shall remain in force until further notice notwithstanding anything to the contrary contained in the ATS or the CDS Rules of the CSE or any decision of the Board of Directors of the CSE that may have been taken in respect of market wide circuit breakers.
The CSE is further directed to inform all broker members and participants of the CDS forthwith of this directive.