Oct 2008 Financial News

Stock Exchange makes rule change

Oct 23, 2008

The T&T Stock Exchange (TTSE) will on Monday make a change in its rules to prevent small transactions affecting the prices of stocks.

The change in Rule 207 will set volume thresholds at which price changes can take place.

The TTSE said in a press release yesterday that the rule change had been approved by its regulator, the T&T Securities & Exchange Commission (SEC), for immediate implementation for a 60-day trial period.

The SEC will hold a hearing on December 4, after which it will make a final decision on the rule change.

For some time there has been consternation in the investing community over the ability of small transactions to cause big changes in the price of a stock.

The transaction which triggered the rule change happened three Mondays ago on October 6, when three trades in shares of Republic Bank Limited amounting to 365 stock units caused the price of the bank’s stock to fall by $9.20 cents (9 per cent), in the process wiping out $1.5 billion of the bank’s market capitalisation.

Under the new system the price of a stock costing up to $4.00 can only be changed up or down on a volume of at least 5,000 shares of that stock.

The price of a stock costing between $4.01 and $10.00 can only be changed after 3,000 stocks are traded; for a stock priced between $10.01 and $20, the volume which would trigger a price change would be 2,000; for a stock priced between $20.01 and $50.00, there must be trades of 1,000 stocks before the price can change and in the case of a stock priced at $50.01 and above, 500 shares must change hands before a price change is registered.

Stock price required for price change:

$0 to $4 - 5,000

$4.01 to $10 - 3,000

$10.01 to $20 - 2,000

$20.01 to $50 - 1,000

$50.01 to above - 500


Source:
Trinidad Guardian
Thursday October 23, 2008
http://www.guardian.co.tt/business1.html