With the introduction of a new regulatory instrument Colombo stock market will be resuming trading soon after the Covid-119 situation becomes conducive for investors to step in under better sentiment and conditions, officials said.
The Securities and Exchange Commission of Sri Lanka (SEC) has introduced a system that automatically halts trading and close the market for the day if the S&P SL20 index drops by 10% .
The circuit breaker mechanism will take effect from the date the market re-opens and remain in force until further notice.
A circuit breaker is a regulatory instrument that halts the trading of a security or an index for a certain period.
Circuit breakers are triggered when a security experiences a large percentage swing in either direction or a market index experiences a catastrophic decline.
It is used to prevent excessive speculative gains or losses on a security or devastating losses in the markets.
The SEC said that having taken into consideration the current market condition it has deemed it necessary to amend the current methodology by introducing a Three Tiered Circuit Breaker structure having taken in to consideration the prevailing market conditions
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