Malaysia Revises Circuit Breaker Mechanism, Price Limits

Source: Regulation Asia Editors, Regulation Asia 2020-07-13

The temporary revisions to the static and dynamic price limits, and the circuit breaker, are being implemented to provide added market stability and confidence.

Malaysia’s SC (Securities Commission) and Bursa Malaysia have announced a temporary revision to the existing market management and control mechanisms to provide added stability and confidence in the marketplace.

“The decision for these precautionary measures took into account global market conditions that remain volatile amidst persistent uncertainties due to Covid-19, continued economic weaknesses and the re-escalation of geopolitical tensions,” reads an SC-Bursa joint statement.

Circuit breaker levels will be reduced to two levels, i.e. when the FTSE Bursa Malaysia records a decline of 10 percent and 15 percent within a trading day. Currently, the circuit breaker mechanism has three levels – 10 percent, 15 percent and 20 percent.

If the 10 percent level is triggered, market-wide trading will be halted for 1 hour. If the 15 percent level is triggered, trading will automatically be halted for the rest of the trading day.

The static and dynamic price limits for FTSE Bursa Malaysia component stocks are also being revised.

For stocks priced at or more than MYR 1, the upper limit for static price will be +30 percent from the reference price and the lower limit static price will be -15 percent. The upper dynamic limit is +8 percent and lower dynamic limit is -5 percent.

For stocks priced under MYR 1, the upper limit for static price will be +30 sen from the reference price and the lower limit static price will be -15 sen. The upper dynamic limit is +8 sen and lower dynamic limit is -5 sen.

The revisions will be applicable for a six-month period from 20 July 2020 until 18 Jan 2021.

“The SC and Bursa Malaysia will continue to closely monitor global developments and take a prudent approach in implementing the necessary measures to support a fair and orderly market,” the statement said.

Bursa Malaysia

Malaysia Revises Circuit Breaker Mechanism, Price Limits

Subscribe to Our Newsletter!

Subscribe to Our Newsletter!