Understanding Market Halts

Halting trading of the market due to an extreme decline in a particular index during the day, as a result of the share prices falling rapidly, is a measure that is implemented by stock markets around the world. Trading Halts triggered by circuit breakers, were a common occurrence during the recent weeks and continue to be so in stock markets globally, as the investment community responds to global economic implications of the COVID-19 pandemic. According to the World Federation of Exchanges, market volatility surrounding the COVID-19 pandemic has reached levels comparable with the Global Financial Crisis of 2008, with one-day losses not seen since 1987.

A similar trend was visible on the Colombo Stock Exchange (CSE) as well, with a 30-minute Market Halt being imposed on 10^th, 12^th, 13^th and 20^th March 2020 due to the S&P SL 20 index declining over 5% from the previous day’s closing levels.