
The Colombo Stock Market (CSE) will adopt a 3 tiered index based circuit breaker structure (New Circuit Breaker) which will attach to the S&P SL20 Index. The S&P Index follows 20 leading publicly traded companies on the CSE. The New Circuit Breaker was introduced by the Securities Exchange Commission (SEC) by its directive.
The New Circuit Breaker will be implemented as follows –
First Circuit Breaker
Trading to be halted for a period of 30 minutes when the S&P SL20 Index drops by 5%.
Second Circuit Breaker
Once trading recommences following the First Circuit Breaker, trading will be halted for a further 30 minutes when the S&P SL20 Index drops a further 2.5% (ie. an aggregate drop of 7.5%).
Third Circuit Breaker
Once trading recommences after the Second Circuit Breaker (ie. after the S&P SL20 Index had dropped an aggregate 7.5%), trading will be halted and the market closed for the day when the S&P SL20 Index drops a further 2.5% (ie. an aggregate 10% drop).
The New Circuit Breaker is to be operational from the date the CSE reopens for trading and will remain in place until further notice.