₦airaland Forum

For earlier post by GYMER, see: https://www.nairaland.com/6252005/nse-triggers-circuit-breaker-asi

At 12:55 pm Thursday 12Nov2020, the Nigerian Stock Exchange (NSE) halted trading activities when the NSE All-Share Index (NSE ASI) rose beyond the set threshold of 5%. So what exactly is this "Circuit Breaker"?

NSE CIRCUIT BREAKER
-- Was put in place to check extreme price volatility and protect investors.
-- When NSE ASI rises or drops 5% in a trading day (10.15am - 1.45pm), circuit breaker is triggered.
-- Market goes off and there will be no activity for 30 minutes.
-- After 30 mins, market resumes and all trading activities resume.
-- After market resumption, if there is another 5% price movement in same direction, circuit breaker can be triggered a 2nd time (within same day), but will force closure of the market and resumption next trading day.

Tanx

Okay thanks. The All Share Index, in simple terms means?


Circuit breakers are electrical devices, unless there exists also, stock circuits, I find it's usage in stock exchange, very strange.

Taciturn1:
Okay thanks. The All Share Index, in simple terms means?

Circuit breakers are electrical devices, unless there exists also, stock circuits, I find it's usage in stock exchange, very strange.

The "All-Share Index" is a series of numbers showing the changing average value of share prices of all companies on a stock exchange.

It is used as a measure of how well a market is performing. When prices are continuously rising it is called a "Bullish" trend and when prices are continuously dropping it is called a "Bearish" trend. The idea behind this is from the animal kingdom: bulls are supposedly very bold while bears are timid.

On the term "circuit-breaker", you are correct; the term was borrowed from the field of electrical engineering; a circuit breaker is an automatic device for stopping flow of current in an electric circuit as a safety measure.

In a stock market or stock exchange, a "circuit breaker" is an automatic rule for stopping share trading as a safety measure, in the occurrence of an "extreme" event. On the Nigerian Stock Exchange, any rise or drop of more than 5% in the All-Share Index (during a trading day) constitutes such an extreme event.

prof2007:
The "All-Share Index" is a series of numbers showing the changing average value of share prices of all companies on a stock exchange.

It is used as a measure of how well a market is performing. When prices are continuously rising it is called a "Bullish" trend and when prices are continuously dropping it is called a "Bearish" trend. The idea behind this is from the animal kingdom: bulls are supposedly very bold while bears are timid.

On the term "circuit-breaker", you are correct; the term was borrowed from the field of electrical engineering; a circuit breaker is an automatic device for stopping flow of current in an electric circuit as a safety measure.

In a stock market or stock exchange, a "circuit breaker" is an automatic rule for stopping share trading as a safety measure, in the occurrence of an "extreme" event. On the Nigerian Stock Exchange, any rise or drop of more than 5% in the All-Share Index (during a trading day) constitutes such an extreme event.

Très instructif!