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Starting with the recent expiration of derivatives on the Tel Aviv-25 index, which took place on Thursday March 29, 2007, the TASE has put into operation, on a monthly basis, a new adjustment of “circuit breakers” on the date of expiration to prevent severe fluctuations of the opening index.
In accordance with the new procedures, which only relate to expiration dates, if fluctuations of five percent or more are anticipated on the TA-25 index, opening trade will not take place at the designated time and the pre-opening phase will be extended by 45 minutes (to be known as the “first extension”).
On expiration of the first extension and a fluctuation of less than 12 percent is anticipated on the TA-25 index, opening trade will take place as usual. However, if a fluctuation of 12 percent or more is expected after the first extension lapses, opening trade will still not be implemented and the pre-opening phase will be extended by an additional 45 minutes (the “second extension”). If this occurs, the CEO of the Stock Exchange is authorized to recommend to the Chairman of the Board of Directors, in consultation with at least three members of the Board, to extend the pre-opening phase. The Chairman is permitted to decide on such an extension and determine that it will last longer than 45 minutes or that trade will not even open on that day.
If fluctuations of 12 percent or more in the index are expected when .the second extension ends the opening trade will still not be activated and the pre-opening phase will be extended again for a further 45 minutes (the “third extension”).
If the pre-opening phase is extended twice on the same day due to anticipated severe fluctuations of the TA-25 index and fluctuations of 12 percent or more are expected on the index for a third time prior to the renewal of trade, then opening trade will not take place and trade in the stock market and derivatives on the TA-25 index and the TA banks index will be suspended until the end of the day.
