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PSE Adopts Three-Phase Circuit Breaker System With 20% Maximum Decline

The new system takes effect on Monday.
IMAGE FLICKR/Jun Acullador (CC BY-ND 2.0)
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On Monday, May 4, the Philippine Stock Exchange (PSE) will implement its new SEC-approved three-phase circuit breaker system, which will be triggered if the PSE index declines anywhere between 10 percent and 20 percent.

According to PSE’s latest circular, the new system will be replacing the old one in an effort “to provide emergency volatility-control mechanisms in light of the COVID-19 pandemic affecting markets globally.”

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If the market declines by 10 percent, the first level circuit breaker will be triggered, halting trading for 15 minutes. If the market declines by 15 percent, the second level circuit breaker will be triggered, halting trading for 30 minutes. And if the market declines by 20 percent, the third and highest level circuit breaker will be triggered, halting trading for 60 minutes.

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Trading scheduled have been shortened in light of quarantine, and as such, level one, two, and three circuit breakers can only be triggered up until 12:35 p.m., 12:10 p.m., and 11:40 a.m., respectively.

Each circuit breaker level can only be triggered once a day.

In addition to this, SEC also approved the change of PSE’s lower threshold for pricing brands from 50 percent to 30 percent, but the upper threshold will remain at 50 percent. This is another mechanism to cope with high market volatility during the pandemic.

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Anri Ichimura
Staff Writer, Esquire Philippines
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