The Moscow Exchange will finalize the mechanism of discrete auctions to reduce destabilization in shares of the second and third tiers, Boris Blokhin, director of the stock market department of the Moscow Exchange, told reporters. He called the mechanism a kind of “speed bump” on the path of unreasonably strong price growth.
A discrete auction is used instead of the regular trading mode, if the price of a share rises from the closing price of the previous trading day by more than 20% within 10 minutes in a row. During a discrete auction, bidders can submit bids to buy or sell securities. The price of these orders will be taken into account when trading resumes in the normal mode.
“We have a methodology against destabilization – this is a document that is constantly being finalized and discussed, including with the regulator. The second point is a discrete auction, it has shown its effectiveness and is the main mechanism for combating destabilization. At least the price stopped after the introduction of a discrete auction,” Blokhin said.
For example, on Friday, August 25, the exchange held one discrete auction – with the shares of Kamchatskenergo. By 10:13 Moscow time, their price increased by 22.09% compared to the close of the previous day. From 10:17 to 10:47 Moscow Exchange activated the discrete auction mode. After it, the price of securities added a little more than 5% to the close.
Earlier, Vedomosti wrote about the dangers of the activity of private investors for the Russian stock market, especially in shares of the second and third echelons.
Starting from June 5, the trading floor began holding discrete auctions for all traded shares and depositary receipts. Prior to this, the technology of discrete auctions was applied only to securities from the Moscow Exchange Index calculation base.
In early August, the site published a message warning investors that against the backdrop of increased volatility in a number of stock market instruments, it is worth making balanced investment decisions, taking into account official information from issuers and professional market participants.
As Forbes reported, the Moscow Exchange in August recorded mive cases of price destabilization on the stock market. In this regard, 122 discrete auctions were held in the first two weeks of the month, while in July – only 57 for the entire month.