CSE inquiring into bizarre error trade

The Colombo Stock Exchange (CSE) said yesterday it would be conducting an inquiry into the error trade which triggered the market halt for 30 minutes to cool off after the Milanka Index crashed by 5%.

CSE said at 10:57 a.m. on 25 November 2011 the MPI dropped over 5% from the previous market day’s close, prompting the CSE to impose a market halt of 30 minutes from 11 a.m. to 11:30 a.m. The market halt was lifted at 11:30 a.m.  “On further inquiry, the CSE noted that the MPI had dropped by over 5% due to an error trade relating to 1,200 shares of Distilleries Company of Sri Lanka PLC at Rs. 100. The closing price of Distilleries Company of Sri Lanka PLC shares on 24 November 2011 was Rs. 149.60.

The relevant broker firm has notified the CSE regarding the error trade,” it said in a statement.

As per CSE Circular No. 01-12-2008 dated 8 December 2008, in the event the Milanka Price Index (MPI) drops 5% within the day from the previous market day’s close, a ‘Market Halt’ will be imposed on all equity securities for a period of 30 minutes.

A ‘Market Halt’ is used internationally by stock exchanges as a procedure for volatility management. Under such procedures trading may be halted temporarily or, under extreme circumstances, a market may be closed prior to normal close of the trading session.

“The CSE will be conducting an inquiry into this error trade,” the statement added.