In the stock markets, the circuit breaker halts trading in all equity and equity derivative markets nationwide for a specified time, when the index hits predefined levels. Circuit breakers are applicable for individual securities as well. The market regulator, Securities and Exchange Board of India (SEBI) has introduced circuit breakers to curb severe market selling/volatility in the stock markets, with effect from July 2, 2001.

The market-wide circuit breakers would be triggered by the movement of either BSE Sensex or NSE S&P CNX Nifty, whichever is breached earlier.

Circuit breakers are tiggered when either of the indices move either ways (upside/downside) by 10 per cent or 15 per cent and 20 per cent, compared to the previous day’s closing level of the index.

In case of a 10 per cent movement of either of these indices, there would be a 45-minute market halt if the movement takes place before 1 pm. In case the movement takes place at or after 1 pm but before 2:30 pm there will be a trading halt for 15 minutes. In case the movement takes place at or after 2:30 pm there will be no trading halt at the 10 per cent level and the market will continue trading.

In case of a 15 per cent movement of either index, there will be a one hour 45-minute halt if the movement takes place before 1 pm. If the 15 per cent trigger is reached on or after 1 pm but before 2 pm, there will be a 45-minute halt. If the 15 per cent trigger is reached on or after 2 pm, trading will halt for the remainder of the day.

In case of a 20 per cent movement of either of the indices at any point of the day, there will be a trading halt for the rest of the day.

Circuit filters are also applicable for individual stocks with scrip-wise price bands of 20 per cent either way. This is for all scrips in the compulsory rolling settlement except for the scrips on which derivatives products are available or scrips included in indices on which derivative products are available.

Source: SEBI and BSE websites

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