What's a circuit breaker

SGX’s dynamic circuit breaker in the securities market guards against disorderly situations in the face of rapid and unchecked market movements. It gives investors time to assimilate incoming information and make informed choices during periods of high market volatility.

The circuit breaker covers:

• Straits Times Index component stocks/units
• MSCI Singapore Index component stocks/units
• The following products with a first reference price at or exceeding $0.50
  • Stocks/units
  • Stapled securities
  • Funds
  • Exchange traded funds
  • Exchange traded notes

How it works

The circuit breaker is activated when an incoming order could potentially match an existing order in the order book at a price outside the circuit breaker price bands. 

When this occurs, a five-minute cooling-off period is triggered, the incoming order is rejected and will not be matched at a price outside the price band. During the cooling-off period, trading can still take place within the price bands. All existing orders will not be affected and new orders can continue to be placed in the order book as long as they do not result in the potential matching of trades outside the price band. If there are no trades done during the cooling-off period, the first trade after the cooling-off period will not be subject to the circuit breaker.

The price band comprises of an upper and lower price limit based on a deviation of 10% from the applicable reference price. Trades at or within the limits will not activate the circuit breaker.

The dynamic reference price during continuous trading is the last traded price as of five minutes prior to each potential trade. If no trades were executed in the trading day’s continuous matching phase, the dynamic reference price will be the trading day’s first reference price. If the circuit breaker is triggered and no trades are done during the cooling-off period, the price of the first trade will serve as the reference price for the five minutes following the trade.

In operation during the continuous trading phase to allow for efficient and accurate price discovery, the circuit breaker is not applicable during the following sessions:

• Opening routine
• Mid-day break
• Closing routine
• First trading day of newly listed instruments

 

For more information, please refer to SGX-ST Regulatory Notice 8.14.1 – Circuit Breaker.