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  Investor Protection
Table of contents
  • 1. Exceptional Order
  • 2. Circuit Breakers
  • 3. Trading Halts
    •  

    The Tel Aviv Continuous Trading (TACT) system includes mechanisms aimed at protecting investors:

    1. Exceptional Order

     

    In order to prevent errors in trading, due to typographical errors in orders during the continuous trading phase, TACT incorporates "filters" that allow orders at blatantly exceptional prices (such as are suspected of being erroneous) to be submitted only through a trading supervisor.

     

    Exceptional orders are buy orders at a price that is higher, by 35% or more, than the price of the last transaction that was carried out, or sell orders at a price that is lower, by 35% or more, than the price of the aforesaid last transaction. An exceptional order can be submitted to TACT only by applying to the trading supervisor.

     

    Let it be clearly stated that the "exceptional price order" mechanism is intended only to prevent trading errors; its purpose is not to prevent sharp price fluctuations. It should be emphasized that, in the continuous trading phase, there are no limitations on price fluctuations.

    2. Circuit Breakers

     
    When necessary, the Tel Aviv Stock Exchange exercises "price monitoring" and "circuit breaker" mechanisms in order to mitigate volatility on a given trading day. When the TA-25 index fluctuates sharply, opening trading is postponed or trading is halted, as applicable and as outlined below.
     
    In the Pre-Opening phase

    The 'price monitoring mechanism'
    If the last theoretical TA-25 index fluctuates by at least 2.5% relative to the base index , opening trading in equities and some Exchange-traded Products (ETPs) is postponed by a random interval of 3 - 5 minutes ("First Delay"). If, following the first delay, the last theoretical TA-25 index still fluctuates by at least 2.5%, then opening trading in the equities market is again postponed by a random interval of 3 - 5 minutes ("Second Delay"). 
    No announcement is made regarding these delays.

    First Circuit Breaker
    Following the Second Delay, the last theoretical TA-25 index is recalculated. If the fluctuation is at least 5% at that time, opening trading in the equities market is postponed and trading in the underlined derivatives is halted for a random interval of 45 - 50 minutes.

    Second Circuit Breaker
    Towards the end of the postponement of the opening trade resulting from the first circuit breaker, the last theoretical TA-25 index is once again calculated. Should the fluctuation be less than 12%, the opening trade is begun. If, however, the fluctuation is at least 12%, the opening trade in the equities market is further postponed and the trading halt in the underlying derivatives is extended for a period of time determined by the TASE CEO, after consulting with the Chairman of the TASE Board of Directors. At this juncture, the CEO is entitled to instruct a trading halt which shall resume until the end of that trading day.
     
    Should opening trade be postponed twice on a given day due to the exercise of circuit breakers, and the fluctuation of the last theoretical price of the TA-25 calculated for a third time is at least 12% – the equities tradingmarket, as well as trading in the underlying derivatives, shall not be resumed on that day.
     
    Notwithstanding the above, the TASE CEO is entitled, after consulting with the Chairman of the TASE Board of Directors, to resume trading on that day, if it has been decided that certain circumstances warrant the resumption. In such a case, the TASE CEO is authorized to amend the trading schedule on that day.
     
    Should trading be halted as stated above, the TASE CEO, after consulting with the Chairman of the TASE Board of Directors, is entitled to halt  trading in additional TASE-traded securities as well.

    In the Continuous Trading phase

    First Circuit Breaker
    Should the TA-25 index fluctuate by at least 8% relative to the base index price, then trading in the equities market and in the underlying derivatives is halted for a 45 minute period. If, following this halt, the fluctuation is greater than 8%, in the same direction, but remains less than 12%, a first circuit breaker shall not be exercised again on that day. 
     
    In other words , First circuit breakers will not be exercised during the Continuous Trading phase if on the same day a circuit breaker was previously exercised on the pre-opening stage.  

    Second Circuit Breaker
    Should the TA-25 index fluctuate by at least 12% relative to the base index price, trading in the equities market and in the underlying derivates shall be halted until the end of that trading day.
     
    The TASE CEO is entitled to halt trading in additional TASE-traded securities as well.
     
    Notwithstanding the above, the TASE CEO, after consulting with the Chairman of the TASE Board of Directors, is entitled to renew trading on that day, if it has been decided that certain circumstances warrant the resumption. In such cases, the TASE CEO is authorized to change the trading schedule on that day.
     
    Should  trading be halted as stated above, the TASE CEO, after consulting with the Chairman of the TASE Board of Directors, is entitled to halt  trading in additional TASE-traded securities as well.

    Pre-closing phase
    Should the last theoretical TA-25 index fluctuate by more than 12% relative to the base index during the Pre-closing phase, trading in the equities market and in the underlying derivatives is halted until the end of the trading day.

    Notwithstanding the above, the TASE CEO, after consulting with the Chairman of the TASE Board of Directors, is entitled to resume trading on that day, if it has been decided that certain circumstances warrant the resumption. In such a case, the TASE CEO is authorized to amend the trading schedule on that day.

    Should trading be halted as stated above, the TASE CEO, after consulting with the Chairman of the TASE Board of Directors, is entitled to halt trading in additional TASE-traded securities as well.

    Announcements regarding the exercise of circuit breakers are posted on the TASE information dissemination system.

    3. Trading Halts

     

    When substantive information about a company or about one of its securities is made public, it may be decided to halt trading in that security for a fixed term of 45 minutes, in order to give investors an opportunity to reconsider their orders in the light of the new information. Fixed term halts in trading are made when financial reports are published. In general, such halts also take place when a purchase offer has been made, when control of a company is transferred, when a substantive transaction by a company is announced, and so forth.

    In the continuous trading phase trading halts are carried out in the following manner:

     

    If notice was given of a halt in trading that will end before the closing trading phase of that security, then trading will be conducted as follows:

     

    During the first fifteen minutes of the halt in trading, orders will not be accepted and orders submitted to TACT will be rejected.

     

    When the first fifteen minutes of the halt in trading have passed and until its conclusion, new orders may be submitted, including orders that cancel or update orders that had been submitted to TACT before the trading halt began. During this interval the theoretical price and turnover are published.

     

    During a fixed term trading halt only LMT orders may be submitted (except during its first fifteen minutes). Orders of any other kind will be rejected.

     

    At the end of the 45 minutes of the trading halt an "additional opening trade" will take place and an "additional opening price" will be set. If no transactions were carried out in the additional opening trade, the "additional opening price" will be set at the price of the last transaction carried out before trading was halted. Trading that took place during the "original" opening trading is not canceled and the transactions carried out then remain in effect.

     

    At the "additional opening trade" the price of the security is allowed to fluctuate without any limitation, and the minimum size of an order is as it is in the opening trading phase. After the "additional opening trade" continuous trading is resumed in its regular form.

     

    Extension of the Trading Halts

    A 45 minute fixed term halt in trading may be extended by an additional 45 minutes or until the end of the trading day. During the extension of a halt in trading only LMT orders may be submitted, as well as orders that change or cancel orders made before trading was halted. Orders of any other kind will be rejected. During the extension period theoretical price and turnover are published.

     

    At the end of the halt in trading an "additional opening trade" will take place, as aforesaid.

     

    Publishing Information about  the Trading Halts

    The Stock Exchange releases announcements about fixed term halts in trading, of the reason for it and of the time when it began, over the TASE Information Systems.

     
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