Nevanji Munyaradzi Chiondegwa
The Zimbabwe Stock Exchange ( ZSE ) has reduced circuit breakers for counters trading above Z$1 and for all penny stocks.
This was announced by The Chief Executive Officer Dr. J. Bgoni in a notice to the public on changes to ZSE trading operations.
In the announcement, Dr. Bgoni notified all stakeholders of the following operational changes which come into effect from the 3rd of May 2022;
i. The ZSE will reduce circuit breakers for all counters trading above ZWL1 from ±20% to ±15%;
ii. The ZSE will reduce the circuit breakers for penny stocks (all stocks with a market price below ZWL1) from 100% to 20%;
iii.The ZSE will introduce a market wide trading halt of 30 minutes for index movement (ZSE All Share) of ±10% in a trading session.
He said, “The above changes have been necessitated by a benchmarking exercise undertaken by the ZSE against⅞ other comparable stock exchanges in the region and beyond. The ZSE will also continue to review its operations in line with market developments.”
A penny stock typically refers to the stock of a small company that trades for less than $1 per share
A trading curb is a financial regulatory instrument that is in place to prevent stock market crashes from occurring, and is implemented by the relevant stock exchange.
A circuit breaker functions in the trading world the same way it does for electrical circuits in a home. When things get overloaded, it kicks in and shuts down the circuit.
In trading, circuit breakers are emergency measures established by stock markets that shut down trading activity temporarily or for the rest of the trading day when market prices drop significantly.
Circuit breakers attempt to curb panic-selling and can also be triggered on the way up with panic-buying. They are commonly used for individual securities as well as broad market indexes.
Circuit breakers function automatically by stopping trading when prices hit predefined levels in exchanges around the world.
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