New circuit breaker norms from Jan 4

The Bombay Stock Exchange (BSE) has announced that a movement of 1,750 points in the Sensex either way in a trading session will automatically stop the trading, during the fourth quarter, beginning from January 4.

In case of the National Stock Exchange (NSE), a movement of 520 points in the Nifty will lead to triggering of the circuit breaker.

Circuit breaker refers to the automatic halt of trade following massive jump or slide in the market. The last time the markets were paused due to this was on the day when the last general election resulted were announced in May which gave a clear mandate to the UPA alliance.

The duration of halt will depend on the time at which the circuit breaker is triggered.

Both the exchanges follow the market-wide circuit breaker system which is applicable at three stages of the index movement either way at 10, 15 and 20 per cent. This circuit breaker brings about a coordinated trading halt in all equities and equity derivatives markets nationwide.

In a statement, the BSE said the absolute points of Sensex variation (over its previous day’s closing) which would trigger a market-wide circuit breaker for any day in the quarter will be 1,750 points (10 per cent), 2,625 points (15 per cent) and 3,500 points (20 per cent).

The NSE said a movement of 520 points in the Nifty (10 per cent), 780 points (15 per cent) and 1,040 points (20 per cent) will trigger the circuit breaker.

The new trigger points have been arrived at on he basis of the December 31 closing of the Sensex and Nifty.

The circuit breakers will get triggered by the movement of either the Sensex or the Nifty, whichever is breached earlier.

The exchanges said the percentages are translated into absolute points of index variations (rounded off to the nearest 25 points in case of the Sensex and 10 points for the Nifty).

At the end of each quarter, these absolute points of index variations are revised and made applicable for the next quarter.