From Wall Street to Asia, the recent sell-off in global stock markets has triggered trading halts in multiple stock exchanges — an occurrence that could become increasingly common as investors fear the impact of the coronavirus outbreak.
In Hong Kong, the circuit breaker is based on a "reference price" — or the last traded price 5 minutes ago. A cooling-off period is triggered if the price of a stock goes above or below 10% from the reference price. During the cooling-off period, which lasts for 5 minutes, trading is allowed only within a fixed price band of 10% above or below the reference price.
Starting from May, the Hong Kong stock exchange will expand its circuit breaker to cover another 500 or so stocks, and the reference price that will trigger a cooling period will also be tiered according to market capitalization., the company that manages the country's main exchanges, apply trading halts to all futures and options contracts, as well as derivative products relating to futures and options.
Each product has its own "price limit range" that will trip the circuit breakers, some of which will be revised every few months using a formula that takes into account past price trends.In South Korean markets, trading of all listed securities will be suspended for 20 minutes if the respective benchmark index —The triggering of circuit breakers is limited to once per day.or Sensex breaches a pre-determined limit.
Depending on which limit is breached, a market-wide trading halt will last from 15 minutes to 1 hour 45 minutes, or even close for the day.
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