PSE adopts 3-tier circuit-breaker system

The PSE’s 3-tier circuit-breaker system takes effect on May 4, 2020.

The Philippine Stock Exchange has tweaked its market-wide circuit breaker to install a three-tier system that automatically halts intra-day trading at varying duration once certain thresholds are breached.

The three-level circuit breaker – duly approved by the Securities and Exchange Commission “by way of emergency volatility-control in light of the COVID19 pandemic affecting markets globally” – will take effect on May 4, 2020, PSE president Ramon Monzon said in a memorandum issued on Wednesday.

The new system will have multiple circuit breaker triggers for declines in the benchmark index, PSE index, of at least 10 percent 15 percent and 20 percent, resulting in a market-wide trading halt lasting 15 minutes, 30 minutes and 60 minutes, respectively.

This will replace the current system, an offshoot of the 2008 global financial crisis, which halts trading for 15 minutes once the PSEi declines by at least 10 percent. This can be triggered only once per trading session.

Under the new rules, each level of the new circuit breaker can be triggered once a day.

Level 1 circuit breaker, whereby PSEi decreases by at least 10 percent compared to its previous day’s closing level, the 15-minute trading halt can be triggered only 60 minutes up to 2:55 p.m. once the PSE returns to whole-day trading schedule.

Level 2 circuit-breaker can be triggered only up to 2:40 p.m. while level 3 can be triggered up to 2:10 p.m. only.

Under the current shortened trading schedule where pre-close starts at 12:45 p.m., level 1 circuit-breaker can be triggered up to 12:25 p.m. only. Level 2 can be triggered up to 12:10 p.m. while level 3 can be triggered up to 11:40 a.m. only.