Economy News: The Securities and Exchange Commission of Sri Lanka has implemented a Three Tiered Circuit Breaker framework to be added to the S&P SL20 Index with a view to removing volatility in the S&P SL20 Index by offering a layered approach.
The mechanism for the circuit breaker will take effect from the day the market resumes and will remain in place until further notice.
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.
