The divisional head, Capital Markets, Nigerian Exchange Limited (NGX), Mr. Jude Chiemeka, has restated the Exchange’s commitment to positioning the Nigerian capital market as a global investment destination for stakeholders.
Chiemeka made this disclosure during his opening remarks at the NGX Index Circuit Breaker webinar, themed: ‘Role and Impact of Index Circuit Breakers in the Capital Market.’
He noted that “As an agile exchange, NGX is committed to enhancing the competitiveness of the Nigerian capital market as a global investment destination. The webinar which is geared towards educating market operators, investors and other stakeholders about the design and benefits of Index Circuit Breakers would also examine the unprecedented event of November 12, 2020 when the NGX Index Circuit Breaker was triggered for the first time since its introduction in 2016.”
He also shared the benefits of circuit breakers to daily trading operations, saying, “They play a significant role in capital markets operations by helping to curb panic-selling on stock exchanges, halt trading in event of adverse volatility when prices of securities rapidly move outside of pre-determined bounds and instill investor confidence in the market.”
Financial economists World Federation of Exchanges (WFE), Kaitao Lin said, “Circuit breakers can achieve an improvement in market quality, such as a reduction in volatility, an increase in liquidity, or a more efficient price discovery process. However, circuit breakers often do not have any significant impact on prices as they do not stop a fall in prices.”
Kelvin Piccoli, CPA, Office of International Affairs, Commodity Futures Trading Commission USA said, “The theoretical market microstructure model examines how information shocks affect liquidity, price formation or agent behaviour in the presence of circuit breakers while the econometric event studies test the impact of circuit breakers on trading patterns and market variables.”
