THE Philippine Stock Exchange (PSE) said it has tweaked its circuit breaker rules, which mandate a trading halt once a certain decline threshold is triggered, to put in place a three-phase trigger.
This new three-level circuit breaker setup was introduced to help manage increased volatility in the stock market, the PSE said.
Level 1 circuit breaker will still be based on the original circuit breaker policy introduced in 2008, where a 15-minute market-wide halt is implemented when the PSE index (PSEi) drops by 10 percent from the previous trading session’s level.
Level 2 circuit breaker is tripped when the PSEi falls by 15 percent from the previous trading day’s closing level and involves a 30-minute trading halt.
Level 3 circuit breaker will be triggered and trading will be halted for one hour if the PSEi plunges by 20 percent from the previous trading session’s closing level.
The circuit breaker levels mentioned can only be triggered once per trading day. In case the higher level is breached first, the lower level circuit breaker will no longer be triggered on that trading day.
The PSE said a circuit breaker will not be triggered if doing so will result in having less than five minutes of continuous trading prior to the pre-close, which is presently at 12:45 p.m. under the shortened trading schedule.
This means there will be no trading halt for Level 1 if it is triggered at 12:26 p.m. onwards, if Level 2 is triggered at 12:11 p.m. onwards and if Level 3 is triggered at 11:41 a.m. onwards.
The previous single level circuit breaker has been tripped four times since it was adopted in September 2008: last October 27, 2008, and on March 12, 13 and 19, 2020.
The PSE Trading Rules and Implementing Guidelines of the Trading Rules on the new circuit breakers were approved by the Securities and Exchange Commission.
