CIRCULAR
CIR/MRD/DP/02/2015 January 12, 2015
To,
All Stock Exchanges.
Dear Sir / Madam,
Subject: Index based
market-wide circuit breaker mechanism
SEBI had issued circulars
SMDRPD/Policy/Cir-37/2001 dated June 28,
2001
and CIR/MRD/DP/25/2013 dated September 03, 2013 advising stock exchanges to
implement an index based market wide circuit breaker system to bring about a
coordinated trading halt in all equity and equity derivative markets nationwide
on 10%, 15% and 20% movement either way of BSE SENSEX or NSE NIFTY.
2. The mechanism
implemented by the stock exchanges for ‘Index based market-wide circuit
breakers’ was discussed with SEBI’s Technical Advisory
Committee
(TAC) and Secondary Market Advisory Committee (SMAC). Based on the
recommendations of TAC and SMAC, it has been decided to further strengthen the
mechanism of index based market-wide circuit breaker as under:
(a)
NSE and BSE shall compute their market-wide
index (NIFTY and SENSEX respectively) after every trade in the index
constituent stocks and shall check for breach of market-wide circuit breaker
limits after every such computation of the market-wide index.
(b)
In the event of breach of market-wide circuit
breaker limit, stock exchange shall stop matching of orders in order to bring
about a trading halt as mandated vide SEBI circular dated June 28, 2001. All
unmatched orders present in the system shall thereupon be purged by the stock
exchange.
(c)
BSE and NSE shall implement suitable
mechanism to ensure that all messages related to market-wide index circuit
breakers are given higher priority over other messages. Further, the systems
(including the network) for computation of market-wide index, checking for
breach of circuit breaker limits and initiating message to stop matching of
executable order and acceptance of fresh orders, shall not be used for any
other purposes.
(d) BSE and NSE shall include in the scope of
their annual system audit a review of its index based market-wide circuit
breaker mechanism with the view to identify improvements.
3.
All other conditions shall be as per SEBI
circular SMDRPD/Policy/Cir-37/2001 dated June 28, 2001 and SEBI circular dated
CIR/MRD/DP/25/2013 dated September 03, 2013.
4.
BSE and NSE are directed to make necessary
amendments to the relevant bye-laws, rules and regulations and take necessary
steps to put in place necessary systems for implementation of the provisions of
this circular. All stock exchanges are directed to bring provisions of this
circular to the notice of their stock brokers and also disseminate the same on
their website.
5.
This
circular is being issued in exercise of powers conferred under Section
11 (1)
of the Securities and Exchange Board of India Act, 1992 to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market.
Yours faithfully,
Maninder Cheema Deputy General Manager email:
maninderc@sebi.gov.in
