- ZSE updates circuit breaker thresholds to boost liquidity and price discovery
- Wider trading range introduced for lower-priced stocks on the ZSE
- Ongoing monitoring of circuit breaker changes to ensure market stability
Harare- In its ongoing efforts to bolster liquidity, facilitate price discovery, and align with international best practices, the Zimbabwe Stock Exchange Limited (ZSE) has announced operational changes effective from August 29, 2023.
In a circular released yesterday, the country’s main bourse said these changes primarily concern the use of circuit breakers, a mechanism employed to manage extreme price movements in the market.
The ZSE has decided to revise the circuit breaker thresholds for all listed counters with a market price below the Zimbabwean Dollar equivalent of USD 0.01. Previously set at ±20%, the circuit breaker limits will now be restated to ±100%.
Prior to the operational changes announced by the ZSE, the circuit breaker thresholds for these counters were set at ±20%. This means that if the price of a particular counter moved up or down by 20% from a reference price, trading would be temporarily halted.
However, with the new operational changes, the circuit breaker thresholds for the affected counters have been restated to ±100%. This wider trading range allows for greater flexibility in price movements, enabling more significant fluctuations within a trading session before a circuit breaker is triggered.
By adjusting the circuit breaker thresholds, the ZSE aims to improve liquidity and price discovery for lower-priced stocks. The wider trading range offers market participants increased trading opportunities and potentially encourages higher trading volumes and activity within the affected counters.
The operational changes will impact several counters, with the adjustments taking effect as of August 29, 2023.
It is important to note that these changes will be subject to a weekly review by the ZSE.
The affected counters include Ariston Holdings Limited, Bridgefort Capital Limited, Bridgefort Capital Limited Class B, General Beltings Holdings Limited, Getbucks Microfinance Bank Limited, National Tyre Services Limited, Starafricacorporation Limited, Truworths Limited, Turnall Holdings Limited, Willdale Limited, Zeco Holdings Limited, and Zimbabwe Newspapers (1980) Limited.
By implementing these modifications, the ZSE aims to create an environment that encourages increased trading activity and enhances liquidity across the affected counters. The adjustments to the circuit breaker thresholds will provide market participants with a broader trading range, potentially attracting more investor interest and facilitating improved price discovery.
Market participants and investors are advised to stay updated with the ZSE's ongoing reviews and any further announcements regarding operational changes. The exchange's commitment to enhancing market dynamics and aligning with international best practices is expected to contribute to the growth and development of Zimbabwe's capital market ecosystem.
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