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Aaron Levy
Medicated Lately?
Join date: 3 Jun 2004
Posts: 2,147
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01-17-2006 22:32
Quoting from this article about the Nikkei being forced to close 20 minutes early today: http://www.cnn.com/2006/BUSINESS/01/18/asiastocks.wednesday/index.htmlFrom: someone The TSE halted all trade 20 minutes early at 2:40 p.m. (0540 GMT), as the number of trades neared the 4-million capacity limit of the exchange. My question is simple. How can the Tokyo Stock Exchange have a "capacity limit" to the number of trades? I mean who sets the cap, why is there a cap, etc.? Is there a cap to prevent the bottom falling out with everyone selling, because eventually they'd stop all trades? And if that's the case, what's to stop people from just continuing to sell the next morning? |
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Siro Mfume
XD
Join date: 5 Aug 2004
Posts: 747
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01-18-2006 00:26
From: Aaron Levy Quoting from this article about the Nikkei being forced to close 20 minutes early today: http://www.cnn.com/2006/BUSINESS/01/18/asiastocks.wednesday/index.htmlMy question is simple. How can the Tokyo Stock Exchange have a "capacity limit" to the number of trades? I mean who sets the cap, why is there a cap, etc.? Is there a cap to prevent the bottom falling out with everyone selling, because eventually they'd stop all trades? And if that's the case, what's to stop people from just continuing to sell the next morning? I suspect it's more an issue of reaching a given long int value (or some such) for tracking database entries. So it's really just a matter of adding more capacity as the technology is almost certainly there. |
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Zuzu Fassbinder
Little Miss No Tomorrow
Join date: 17 Sep 2004
Posts: 2,048
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01-18-2006 04:42
Most exchanges have limits to slow down trading in panic situations. The stock market crash in '29 could have been much worse if it had been done electronically instead of by hand.
They didn't talk about anything like this in the article, but I wouldn't doubt that part of the computers "limitations" are based on reasoning like this.
Yes, there is nothing to stop people from continuing to sell in the morning, but in the event of a panic, time for people to calm down and assess the situation usually helps to stop the problem.
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From: Bud I don't want no commies in my car. No Christians either.
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Frank Lardner
Cultural Explorer
Join date: 30 Sep 2005
Posts: 409
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Circuit Breakers, Curbs and Other Trading Restrictions
01-18-2006 06:16
Major stock and commodities exchanges have similar processes, designed to halt trading upon the occurrence of certain events that suggest some imbalance in supply and demand. The halts are temporary, and trading resumes after a certain period of time (during which exchange governors can scramble to address the issue). See http://invest-faq.com/articles/exch-circuit-brkr.htmlOther non-automatic shutdowns can be the result of agreement or political order. The New York Stock Exchange was shut down for a week, if memory serves, following 9/11/01, in part because a large part of its human infrastructure died in the WTC attacks on that date.
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