We have decided to move our exchange opening times on JSE Equity CFDs to 9.10 am. This is as a result of high volatility on stocks at the open, often pushing these stocks into "volatility auctions", at or soon after the open.
Our VP of Trading, Nilan Morar, gives us further context below:
Current volatility has reached levels last seen during the 2008 financial crisis!
Many new market participants (ok, maybe not so new, but at least those who have entered the market in the last 10 years or so) have never seen the world’s largest markets with the deepest levels of liquidity moving by 10% or more in a single trading session.
To deal with periods of extremely high volatility, post-2008, exchanges around the world introduced a mechanism commonly referred to as circuit breakers, that kick-in to halt trading if a particular stock or index moves by a certain predetermined percentage. Locally we’ve adopted the same methodology and have the concept of “Limit Up” or “Limit Down” applicable to indices, and intraday circuit breakers too, that trigger volatility auctions for individual stocks.
An auction can last for 5 minutes or longer, depending on which segment of the market the stock is in, what type of auction it is or if it enters an extended auction period.
Given the various time zone differences between different markets, we often find our market responding to significant moves that occurred during the US session the evening before. Or the Asian session before us opening, causing many of our local stocks to extend their opening auctions.
To try and protect you further from experiencing the effects of volatility that we see recently at the open, we have decided to change the platform opening time to 09.10 am SA Time from 09.05 am SA Time. This change will take effect on Monday 30 March 2020, and we will continue to monitor activity and possibly revise these times at a later stage.
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