ESMA: Publishes a study on the market impacts of circuit breakers
- The EU’s securities markets regulator, today publishes a study on the market impacts of circuit breakers
- Sudden and drastic price swings in financial markets can be a source of market instability and are a concern for market participant
- Circuit breakers key instruments used by trading venues to regulate markets and interrupt excessive price movements
- Based on Morningstar Real Time data ESMA has also created a unique database of circuit breakers
- The study finds that that price volatility is significantly lower after the use of a circuit breaker
- The cross-venue character of ESMA’s database also allows the assessment of coordination of circuit breakers across venues
