The Turkish stock exchange Borsa Istanbul will start implementing the circuit breaker system, which is used to protect investors from panic transactions, on an index basis as of Monday.
The Borsa Istanbul Stock Exchange (BIST) said in an announcement made Friday that the circuit breaker system, which has been implemented on a share basis and is used to protect investors from panic-selling by temporarily stopping the transactions in excessive fluctuations, will start to be implemented on index basis as well.
The circuit breaker system will be applied if the BIST 100 index falls by 5% or more as the first threshold and 7% or more as the second threshold, according to the closing of the previous day.
The circuit breaker, also known as the trading curb is a financial regulatory instrument that works like an insurance system that allows the market to breathe to prevent the investors from being adversely affected by price changes that exceed the determined thresholds and prevents stock market crashes from occurring. It is implemented by the relevant stock exchange organization.
The circuit breakers prevent both speculative gains and dramatic losses within a small time frame.
According to the earlier announcement by the Turkish stock exchange, when the Index-Linked Circuit Breaker System is implemented, contracts based on share and stock indices in the Equity Market, Futures and Options Market and transactions in the Equity Repo Market of the Debt Securities Market will be temporarily suspended.