Will Halting Trade Help?

Operations on the MICEX Stock Exchange were suspended at 2:08 p.m. on October 24 after the index tumbled by more than 10 percent, closing at 513.62 points, 14.24 percent below Thursday’s close. Similarly, the RTS index fell 13.68 percent to 549.43 points, and trading was halted at 5:05 p.m. until October 28. Gazprom shed 21.62 percent, and Rosneft lost 18.18 percent.

Traders are used to regular trading suspensions. RBC reported that some of them even suggest that trading should be halted for a longer period - up to a week or even a month. This could reduce volatility and panic on the Russian market, investors believe.

RBC also lists pros of a longer halt.
The advantages the longer halt may provide are stabilizing market which after a long halt would stop reacting to every external factor, however insignificant it might be; putting aside panic selling and psychological pressure and appealing to common sense.

If trading is suspended for a longer period, the global economic situation might improve by the time of trading resumption, sparing the market from further falls, and perhaps even restoring demand. State support will not have an immediate effect. In this case it would be good for Russian shares, as a lengthy respite would help investors assess the efficiency of measures taken by the Russian government to support the country’s corporate and financial sectors.

Author: Ksenia Kochneva