With multiple triggers, spotlight falls on circuit breaker

Wednesday, 27 April 2022 00:25 - - {{hitsCtrl.values.hits}}

Investors suggest scrapping of circuit breaker and let market has its own free-fall to find its bottom
Buyers keen to collect bargains are handicapped with sudden closure of market

With multiple triggers, capital market participants are suggesting a re-think on circuit breakers.

Last two days alone there had been four triggers whilst since 21 February there had been around 10.

“I think they should eliminate the trigger and allow the market to have a free fall and settle. This kind of frequency of trigger really triggers panic among investors to unnecessarily liquidate stocks,” an investor opined.

“Can we ensure an uninterrupted market operation? Then the market will find its equilibrium. These circuit breakers are ruining the free market dynamics,” said another.

Other market participants too opined circuit breakers should be taken off. “Market orders at 20% below previous traded prices are being put and dragging the index down on thin trades and getting market halted,” they argued adding “If breakers are removed, buyers will come in at a point.”

“Now the market is open and closed within minutes,” said another investor adding that SEC should remove circuit breakers when the index hits 10% and allow it to continue to go on and not allow the individual stock books to open below 25%. “There is a high probability that the index could improve and the market can find some kind of consolidation itself. After trading stops due to circuit breakers, it allows more room (another 25%) to come down in the next day,” he said. “Buyers hardly have any time to put an order even if they wanted to do so. So this methodology makes things worse,” he added.

Another suggestion was to limit market days to two days per week until the economic and political crisis conditions are eased.

Rs. 600 b in value at CSE wiped out in two days: YTD loss now at Rs. 2.6 t