- The head of the Security and Exchange Commission cleared the speculations of Market Shut Down by the government.
- The SEC believed the closing of the markets is rare but unprecedented.
- Investors should have access to their investment which is possible only if markets are running.
The SEC Chair Jay Claton said that SEC was closely monitoring markets and was working with exchanges and market infrastructure providers. “Markets should continue to function through times like this.” stated the Chairman.
So, should the stock markets seal up due to any situation like coronavirus? Let’s find it down!!
What measure can help other than just shut down??
Have you heard of Circuit breakers!!
In this context, circuit breakers play the role of a trigger whenever the overall price drop by a certain magnitude.
For eg, The price of a particular stock declines by 7%, trading will stop for 15 minutes. If dropped further by 7% again no trading for 15 min. If the total percentage fall accounts to 20% then cease trading for the day.
This was first implemented in 1988 and the main goal was to reduce market volatility.
So is Shut down necessary!!!
No doubt the market witnessed shutdown on various occasions, but closing is no solution at all times.
Even when the markets are crashing, investors prefer to stay them open so that they can continue with the trade. Temporary shut down, however, would give market participants a time window to think come up with well-balanced decisions. A shut down would hamper the countries investments in the long run.
William O’Donnell, an analyst at Citigroup Global Market wrote on Monday,
“One might not be faulted to assume that the next major step might be to shut the stock markets to prevent a further, self-fueling sell-off.”
“This is a World War against the virus, so maybe it’s not such a crazy idea?” he added.
Markets on Monday!!
The NYSE trading floor remained open on Monday. Bourse, a stock exchange, took additional precautions amid coronavirus. Including, temperature checks for each people entering the building and stamps on their forearm specifying that person underwent checks.
The president of NYSE, Stacey Cunningham in a tweet said that closing markets would create more market anxiety.
The SEC, on the whole, is doing much more to help US Markets and Americans. It announced regulatory funds and investments for those whose operations may hit by a coronavirus.
It would be very interesting to wait and watch the further coarse of action. Will the market’s grip will be uplifted or any other measures need to be thought!