NSE triggers circuit breaker as ASI hits set threshold of 5%

History was made at the Nigerian Stock Exchange (NSE) yesterday after a market-wide circuit breaker kicked in at exactly 12:55 p.m Nigerian time, when the NSE All-Share Index (NSE ASI) rose beyond the set threshold of five percent, triggering a 30-minute trading halt of all stocks.

The Circuit Breaker protocol was triggered by the increase of the NSE ASI from 33,268.36 points to 34,959.39 points. The market thereafter resumed trading at exactly 1:25p.m. with a 10-minute intra-day auction session, before resuming continuous transactions till the close of the day at 2:30p.m.

This is the first time that the circuit breaker had kicked in since its introduction in 2016 and during the halt of trading, no order could be placed until trading resumed. However, existing orders could be withdrawn or canceled but could not be modified.

At the close of trading on Thursday, the ASI rose by 6.23 per cent to settle at 35,342.46 points while investors gained N1.02 trillion as market capitalisation rose to N18.467 trillion from an opening value of N17.383 trillion. Further investigations revealed that trading halts did not affect the clearing, settlement, and depository operations for matched trades, as these functioned as normal. Furthermore, all existing orders keyed in prior to the trading halt were re-activated and were matched upon resumption of trading. Commenting on the development, Managing Director, Highcap Securities, David Adonri, saluted the NSE for doing the right thing while adding that the positive surge in the market did not reflect the performance of the nation’s economy.

“This is a very rational and welcome action because in the past few days, market operators have been seriously worried about the surge in the market and we were worried the market had diverged from the realities of the socio economy. At the social end, there has been pervasive insecurity around the country which was exacerbated by the social unrest of the EndSARS protest coupled with the economy incurring losses and then global world suspecting a second wave of COVID-19 and one suspects that Nigeria will not be spared either,” he explained.