Source: Beta | Thursday, 12.03.2020.| 15:10
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Belgrade Stock Exchange: We are protected from dramatic breakdowns of the capital market

(Photo: Ti_ser/shutterstock.com)
The Belgrade Stock Exchange is protected from dramatic breakdowns in the capital market. The director of the Belgrade Stock Exchange, Sinisa Krneta, stated today that, thanks to the lessons learned during the 2008 economic crisis, the institution had implemented a range of preventive, automatically run mechanism, which prevent the occurrence of any dramatic breakdowns in stock exchange trading, as was the case in the stock exchange markets in the region due to coronavirus.

– We have in-built price amortization mechanisms, which are self-activated and require no human intervention, so that big and sudden disruptions would not happen, such as a drastic drop or growth of the price of shares, which has a negative impact on the operations of the stock exchange – Krneta told Beta.

He specified that the Belgrade Stock Exchange had installed an automatic mechanism, which prevents drastic drops or increases in share prices in the course of a day.

According to him, the mechanism consists of a combined model of static and absolute zone of price fluctuation.

– When the pre-set percentage of price deviation is reached, the static zone of fluctuation is first activated, which stops the trade process at the stock exchange for a while automatically, without human intervention – Krneta said.

As he explained, if the trend of the great oscillation of prices continues, the mechanism of the absolute zone of fluctuation is activated, which doesn't stop the trade, but prevents a further drop in share prices for that trading day.

– In such crises, the existence of this mechanism enables an unobstructed functioning of an underdeveloped capital market, such as the one in Serbia – said the director of the Belgrade Stock Exchange.
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