Index based market-wide circuit breaker mechanism
Summary
SEBI modifies the index-based market-wide circuit breaker system to require daily revision of limits based on the previous day's closing index level. Trading resumption after a halt mandates a fifteen-minute pre-open call auction session, which reduces the existing market halt duration by the same period. Stock exchanges are directed to implement these changes from October 1, 2013, including necessary bye-law amendments and member notifications.
Text
The stock exchange on a daily basis shall translate the 10%, 15% and 20% circuit breaker limits of market-wide index variation based on the previous day's closing level of the index.
Post-observation of the trading halt, stock exchange shall resume trading in the Cash Market with a fifteen minutes pre-open call auction session.
Such pre-open call auction session shall be governed as per the provisions mandated vide SEBI circulars no. CIR/MRD/DP/21/2010 dated July 15, 2010, CIR/MRD/DP/32/2010 dated September 17, 2010 and CIR/MRD/DP/6/2013 dated February 14, 2013.
In order to accommodate such pre-open call auction session, the extant duration of the market halt prescribed vide SEBI circular June 28, 2001 shall be suitably reduced by fifteen minutes.
With regard to the dynamic price bands mandated in para 6.1 and para 6.2 of the SEBI circular CIR/MRD/DP/34/2012 dated December 13, 2012, the reference price for the dynamic price band in the pre-open session and subsequent trading sessions shall be previous day's closing price.
All other conditions shall be as per SEBI circular SMDRPD/Policy/Cir-37/2001 dated June 28, 2001.
take necessary steps and put in place necessary systems for implementation of the provisions of this circular with effect from October 01, 2013.
make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.
bring the provisions of this circular to the notice of their members and also disseminate the same on their website.
Source: SecMarx — Index based market-wide circuit breaker mechanism. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.