Published: Monday August 25, 2008
AN AUTOMATIC ALERT SYSTEM will be a major part of the new price stabilisation rule to be implemented by the Barbados Stock Exchange (BSE).
This was revealed by BSE deputy general manager of operations Ezra Marshall during a panel discussion at the Grande Salle, Tom Adams Financial Centre, last Monday.
The new rule states: "The general manager or in his absence the operations manager of the exchange may halt trading in a security for a period of not more than two hours if the offer price or the bid price rises or falls more than ten per cent above or below the closing price of the previous day's trading without apparent reason."
Marshall said prices falling outside the ten per cent band would initiate the alert system and markets would automatically be notified.
He noted that manual intervention would be required for trading to resume.
Marshall said there were three possible types of alerts – green, amber and red.
Green alerts meant that prices did not affect the best market price and trading would therefore continue unaffected.
When prices affected the best market price and trading might or might not be halted, amber alerts were triggered.
Red alerts halted trading in stock at ten per cent above or below its last closing price. Marshall noted that this would bring the local exchange in line with international best practice.
"We have identified the reasons why we need to address weaknesses in the market," he said, adding that the new regulation would allow for better price discovery and greater liquidity.
In addition, he projected that it would make the BSE more competitive in regional markets.
Marshall said the length of suspension would vary according to market trend, magnitude of price change and prevailing market conditions.
Source: Nation Newspapers