||Last Updated: Mar 2nd, 2021 - 11:37:26
The Jamaica Stock Exchange (JSE) circuit breaker rule halts trading in a security for an hour should it trade +/-15% from the close price or effective close price to allow for the release, circulation and absorption of any relevant market news and a cool down period while investors consider their option.
The rule was instituted in 1993 following a significant one day drop in the market index with the aim to slow the decline. It was never intended to restrict price change in individual security, only the overall market.
It is full time to scrap the circuit breaker rule as it has become a useless mechanism. Currently when a security is halted nothing happens, investors are not contacted by their brokers, listed companies are not contacted by the JSE, the JSE website does not inform the investing public when trading will resume in the security, nada, nothing.
The case in point here is with Ciboney; on January 29, 2021 the stock price closed at $0.23 and hit an intra-day high of $2.30 on February 25th a whopping 1,000% in 18 trading days. It was halted several times during the period and more than once within the same day. On February 26th at 5:32pm a release from Ciboney was posted on the JSE website and read: “We are not in possession of any material information that would have contributed to the recent trading levels in the company’s shares and are also not aware of a reverse takeover of the company”.
The two trading days following the news release the stock price opened down 30% each day (maximum permitted) and was halted for less than the one hour stated in the rule.
The regulators should be sued by investors who lost money on this stock with NBV of $0.001. So much for all the talk of best practice!
Source: Jamaica Stock Exchange
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