The Abu Dhabi Securities Exchange (ADX) has started applying a system called Circuit Breaker to temporarily stop trade for five minutes during the day when the index drops five per cent, the bourse said in a statement.
ADX did not specify how long the system will be used for, but said it aims to give traders enough time to re-consider their investments, and double check any news that are resulting in the tumbling of share prices.
Rashid Al Balooshi, Chief Executive Officer at ADX, said the system was implemented starting Sunday after noticing that traders were not looking into news carefully before selling their shares. He added that the bourse noticed there was no relation between companies’ performance and their share prices.
On Sunday, the ADX General Index fell as much as 4.2 per cent, before ending 3.63 per cent to be at 4,209.75.
The CEO said that using transparent methods of trade will boost the market’s performance, and investment opportunities, allowing traders to check why prices were moving before making an investment decision.
Al Balooshi also said that the Circuit Breaker system was implemented after recommendations and field studies that proved its effectiveness. The system is being used in many markets such as Tokyo Stock, Nasdaq Stock Market, Singapore Exchange, and Chicago Board Exchange, as well as regional stock markets in Istanbul, and Oman.