By NKIRUKA NNOROM
The Nigerian Stock Exchange, NSE, will increase the circuit breaker, the limit of movement any particular stock is supposed to record in a any trading day, to attract price changes either upward or downward, to 10 per cent from five per cent limit, when the market makers resume operations in the next three weeks.
Stock exchanges around the world introduce circuit breakers to maintain sanity in the market and to ensure that a particular stock does not go uncontrollably to one direction. Whenever the price of a stock increases or declines beyond a specified threshold it is said to have entered into a circuit. So, the circuit breaker is needed to halt the unwarranted movement.
Mr. Adeolu Bajomo, Executive Director, Market Operations and Information Technology, NSE, made the disclosure when he spoke at the yearly Capital Market Conference, titled, “Liquidity & Deepening of Nigerian Capital Market,” Thursday, in Lagos.
Bajomo explained that the change will apply to only stocks that are being managed by market makers, adding, “at a later date, we will consider whether to extend it to other stocks.”