CIRCULAR<\/strong> <\/p>\n

CIR\/MRD\/DP\/02\/2015                                                                         January 12, 2015<\/p>\n

 <\/p>\n

To,<\/p>\n

 <\/p>\n

All Stock Exchanges.<\/p>\n

 <\/p>\n

Dear Sir \/ Madam,<\/p>\n

 <\/p>\n

Subject: Index based
\nmarket-wide circuit breaker mechanism<\/strong><\/p>\n

 <\/p>\n

SEBI had issued circulars
\nSMDRPD\/Policy\/Cir-37\/2001 dated June 28,<\/p>\n

2001
\nand CIR\/MRD\/DP\/25\/2013 dated September 03, 2013 advising stock exchanges to
\nimplement an index based market wide circuit breaker system to bring about a
\ncoordinated trading halt in all equity and equity derivative markets nationwide
\non 10%, 15% and 20% movement either way of BSE SENSEX or NSE NIFTY.<\/p>\n

 <\/p>\n

2. The mechanism
\nimplemented by the stock exchanges for \u2018Index based market-wide circuit
\nbreakers\u2019 was discussed with SEBI\u2019s Technical Advisory<\/p>\n

Committee
\n(TAC) and Secondary Market Advisory Committee (SMAC). Based on the
\nrecommendations of TAC and SMAC, it has been decided to further strengthen the
\nmechanism of index based market-wide circuit breaker as under:<\/p>\n

 <\/p>\n

(a)       
\nNSE and BSE shall compute their market-wide
\nindex (NIFTY and SENSEX respectively) after every trade in the index
\nconstituent stocks and shall check for breach of market-wide circuit breaker
\nlimits after every such computation of the market-wide index. <\/p>\n

 <\/p>\n

(b)       
\nIn the event of breach of market-wide circuit
\nbreaker limit, stock exchange shall stop matching of orders in order to bring
\nabout a trading halt as mandated vide SEBI circular dated June 28, 2001. All
\nunmatched orders present in the system shall thereupon be purged by the stock
\nexchange. <\/p>\n

 <\/p>\n

(c)       
\nBSE and NSE shall implement suitable
\nmechanism to ensure that all messages related to market-wide index circuit
\nbreakers are given higher priority over other messages. Further, the systems
\n(including the network) for computation of market-wide index, checking for
\nbreach of circuit breaker limits and initiating message to stop matching of
\nexecutable order and acceptance of fresh orders, shall not be used for any
\nother purposes. <\/p>\n

(d) BSE and NSE shall include in the scope of
\ntheir annual system audit a review of its index based market-wide circuit
\nbreaker mechanism with the view to identify improvements.<\/span><\/p>\n