SET Launches Rules on Market Disruption and Amends Circuit Breaker Rule Effective Apr 15

The Stock Exchange of Thailand (SET) announced regulations on actions to cope with market disruption, through the board of governors’ authority to temporarily introduce necessary and urgent measures to remedy the impact of such disruption. In addition, SET has also permanently revised the circuit breaker (CB) rule by increasing trigger levels of the CB to three from two. These regulations have been reviewed by participating stakeholders and approved by the Securities and Exchange Commission (SEC) and they will be effective starting from April 15, 2020.

 

SET President, Pakorn Peetathawatchai, said that given the current COVID-19 pandemic which has caused high volatility and unusualness of trading, it is necessary to impose measures in order to effectively react to any incidents that may affect the SET’s operations. Rules on market disruption will reduce the adverse impact and the new CB trigger levels will enable investors to better analyze information for investment decision.

 

The summary of these regulations are as follows:

1) Regulations on actions to cope with market disruption

SET’s board of governors can make a decision to temporarily implement any measures to remedy impact caused by market disruption events, and can specify effective duration as deemed appropriate for the situation.

2) Permanent Revision of circuit breaker rule by increasing trigger levels to three from two

The recent revised circuit breaker rule since March 18, 2020 to three level will be implemented permanently to give more opportunity for investors to analyze information for investment decision, and in line with international practices.

These regulations have been reviewed by market participants and approved by the SEC. They will be effective from April 15, 2020 onwards.

 

Market disruption that needs immediate and temporary measures are as follows:

1) An incident that affects securities trading or usual business operations of the stock exchange, as follows:

1.1) Force majeure affecting securities trading or normal operations of the stock exchange which are beyond the control of SET, such as natural disasters, or catastrophe

1.2) Circuit breaker activation due to change of SET Index in a certain limit, but the market condition remains volatile

1.3) Any action of government agencies or other organizations that may affect securities trading or business operations of the stock exchange

 

2) Measure that SET may review or activate on a temporary basis in order to solve or ease market disruption or its impact by means of the SET’s board of governors’ authorization to enact any regulation or regulations on a temporary basis, as follows:

2.1) Revise the rules for ceiling and floor prices of each or all securities.

2.2) Revise short selling price rules, or prohibit or restrict short selling activities of each or all securities.

2.3) Revise trading methodology of each or all securities to other methods from automatic order matching (AOM).

2.4) Increase collateral margin rate for cash or margin accounts.

2.5) Revise conditions for the use of program trading, or forbid program trading.