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November 2008

Update : Nov. 27, 2008

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1. Partial Revisions to the Criteria for Triggering a Circuit Breaker in Index Futures Trading

Tokyo Stock Exchange, Inc. (TSE) has decided to make partial revisions to the criteria for triggering circuit breakers in index futures trading.

This circuit breaker rule is designed to curb excessive futures-price fluctuations while alleviating investor anxiety and encouraging them to make prudent investment decisions. Under the current rule, the TSE suspends index futures trading whenever certain predetermined conditions ("trigger criteria") are met. Specifically, the TSE will halt trading for 15 minutes if the price fluctuates beyond 50 % of the daily price limit and deviates away from a theoretical price beyond a certain range.

The TSE will revise its circuit breaker trigger criteria in two ways. First, in order to make the details of the trigger criteria easier for market users to understand, the TSE will abolish the criteria for deviations beyond the range of a theoretical price. Secondly, in light of the fact that volatility has been extremely high in recent years, the TSE will set the price range for trading halts in two stages. This will allow the TSE to suspend trading twice a day (currently, only once a day). Specifically, the TSE will suspend trading if the price exceeds 50% of the price limit, and also if the price fluctuates further and exceeds 75% of the price limit. In both cases, trading will be suspended for 15 minutes, which remains unchanged.

The revisions will be implemented on December 15, 2008.

(For more information)
Change of Circuit Breaker Rule on Index Futures

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