ACL halted trading

[kwagga]

Simon could you explain this one ? We all know about the Kumba deal, but to halt trading until wednesday is a little drastic don't you think ?

[SimonPB]

well I assume they wanted to halt trading until they had something to tell the market .. JSE has doen this before, lately when the MTN cancelled deal leaked out of India but not yet announced in SA ..

[saash]

The issuer may request the JSE to suspend trading by written request from the board , if it is apparent that there are two levels of information in the market and the JSE considers that this situation cannot be remedied by the immediate publication of an announcement to clarify the situation.
Stands to reason, that if there are two levels of information - the trade could go either way. Once there is clarification made public, it can go either way.

[kwagga]

Well, personally I think it's a stupid idea, seeing that it clashes directly with free market priciples. Don't they know that any overreaction will be countered again by sensible buyers and sellers, returning the price back to market value? I simply don't understand the rationale behind this.

[org]

Hi

[THRESHOLD]

The issuer may seek to protect their share from downside in order to defend collars and prevent the breach of loan covenants. The logic being that the market will overreact and the price movement will not reflect the circumstances accurately. We are often offered the feeble excuse that the investor is being protected from knee-jerk reactions on his own part as well as that of the market. Clearly, the delay allows the issuers of derivatives (banks) to protect themselves with counterbalancing puts by the time trade re-opens. This is beneficial to the issuer (company) too, as it stabilises and thus encourages the derivative market for the share. IMO - let the free market prevail!