Nigerian Exchange (NGX) on Tuesday notified the investing public that the All-Share Index (ASI) crossed the five per cent (5%) threshold as at 1:50pm on Tuesday, 30 May 2023. This was due to a 5.23% increase above the closing value of 52,973.88 points recorded on Friday, 26 May 2023.
NGX Trading Engine, which runs the trading activities of the Exchange, is configured to trigger the NGX Circuit Breaker once the ASI surges beyond 5% where the threshold is surpassed between the hours of 10:15am and 1:45pm on a trading day. However, Tuesday’s value did not trigger the circuit breaker, as the 5% threshold was only crossed at 1:50pm, which was beyond the cut-off time. The ASI had only moved up by 4.89% as at 1.45 pm on Tuesday.
This is line with Rule 15.46: Trading Halts Due to Extraordinary Market Volatility (Index Circuit Breakers), Rulebook of The Exchange, 2015 (Trading Licence Holders’ Rules), as amended, which defined a Significant Market Move to mean “a five per-cent (5%) move in the ASI between 10:15 am and 13:45 pm on a trading day, as compared to the closing value of the ASI for the immediately preceding trading day.”
Circuit breakers are trading halts used by exchanges to guard against sharp fluctuations in the market. They are designed to give the market an opportunity to take a break and adjust to all available information before re-opening the market; providing protection against excessive volatility during continuous trading sessions of the market. Circuit breakers provide the opportunity for greater information dissemination and assimilation to all market participants, including investors to facilitate better-informed investment decision-making during periods of high market volatility. The NGX circuit breaker was introduced in 2016.