With a view to educating the stock brokers, investors and creating awareness among them on 'Exit-Mechanism' introduced in the bourses in the recent past, the Lahore Stock Exchange (LSE) organised a training session here on Thursday.
The LSE Head of Training Dr Shahid A Zia briefed the participants in detail on the subject, and rules and applications of Exit Mechanism.
He said in case the price of a scrip goes down by five per cent at least one hour before the closure of the trading session on a trading day from the previous day's closing price and if that price remained at the lower circuit breakers until close of trading on that day, the following exit mechanism will apply for the next two days.
In case price in the same scrip goes down by further five per cent on second day from the previous day's closing price and remained for 10 minutes at the lower circuit breakers, there would be a cooling period of 30 minutes and trading would stay suspended during that cooling period.
Thereafter, trading in that scrip will reopen and in case the price goes down by another five per cent on the same day, trading shall continue at or above the lower circuit breakers price till the close of trading session.
Secondly, in case the price of the same scrip continued to go down on the 3rd day also by 20 per cent from the previous day's closing price, the circuit breakers should apply at that point and trading in that scrip should continue at or above the lower circuit breaker price. On fourth day, normal trading will resume.
The participants were further told that exit mechanism would be applicable to all list companies but in relation to ready and futures markets, that is, circuit breaker in one market will be applicable to their markets. If the price of scrip goes down by five per cent during the last hour of trading session on first day, exit mechanism should not apply. However, in case the price of scrip on the second day closes above the second circuit breakers, the mechanism on 3rd day will not apply and normal trading shall resume. At the end of session, Dr Shahid A Zia answered the queries raised by the participants who included investors, members, brokers and their employees.