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SINGAPORE, Jan 22 (Reuters) - Singapore Exchange Ltd will bring in circuit breakers for its securities market on Feb. 24, as it responds to criticism following a penny stock crash in October.
The exchange first proposed circuit breakers in June, but pressure to bring in such a mechanism intensified after three stocks crashed last October, losing S$5 billion ($3.91 billion)of market value in just 40 minutes of trading.
SGX said the circuit breaker will kick in when a trade is about to go through at a price more than 10 percent higher or lower than the securities’ last traded price from at least five minutes earlier.
When a circuit breaker is triggered, there will be a five minute cooling-off period where trading can only take place within a 10 percent price band above or below the reference level.
The breakers will apply to all stocks in the Straits Times and MSCI Singapore indices. It will also apply to all securities priced 50 cents and above, regardless of the currency, for example stapled securities, exchange traded funds, exchange traded notes and extended settlement contracts.
SGX is expected to report its weakest profit in more than a year when it announces results later on Wednesday. ($1 = 1.2785 Singapore dollars) (Reporting by Rachel Armstrong and Anshuman Daga; Editing by Michael Urquhart)