Single-stock circuit breakers, which were adopted in the wake of the “flash crash” of 2010, will be expanded to a wider range of securities next week.
The Investment Industry Regulatory Organization of Canada (IIROC) said Wednesday that the protection provided by single-stock circuit breakers (SSCBs) will be extended to all “actively traded” securities on Feb. 2.
To date, these circuit breakers have only applied to components of the S&P/TSX Composite Index, and exchange-traded funds (ETFs) that are made up of listed securities.
Circuit breakers are now being expanded to include so-called “actively-traded” securities, which are defined as a security that trades on an average of at least 500 times a day, with an average trading value of at least $1.2 million. IIROC will post a rundown of all securities that are included in the SSCB program on its website, which will be updated daily.
Circuit breakers are designed to dampen extreme volatility in a particular security. They are triggered by a price move of at least 10% and 20 trading increments in a five-minute period. The trigger is set at 20% and 40 trading increments in the post-open period, and following a regulatory halt, given the greater volatility at those times. Halts will generally last five minutes, unless an IIROC official decides a longer pause is needed.
Circuit breakers are in effect from 9:30 to 15:30 ET each trading day. When they are not operational, including between 15:30 and 16:00 ET, IIROC officials have the ability to halt or suspend trading in a particular security.