What is the market disruption?
market disruption is an important event that interrupts regular trading and other financial activities. This may occur in one or several days, destabilize the prices of securities, reduce access to the loan and interfere with the normal market business. Regulatory bodies use different means to prevent market distortions and facilitate free and open trade. In the event of a problem, they may decide to investigate to learn more about what happened, what led to it and how to prevent problems of a similar nature in the future. They can be precipitated by a number of triggers that lead investors to start selling securities as quickly as possible. Investors believe that the value of their securities can decrease and want to leave vulnerable business positions. In this process, they can speed up a drop in stock prices by creating panic, leading to a wave of sales activities that pulls a secular prices very quickly.
Inflation bubbles are also a form of market disruption. In this sIitation prices of securities, commodities or other assets increase over the real market value for a short period of time. High business activity makes it easier and increases prices like Yokej people in a sudden overcrowded market. One of the problems with bubbles is the possibility of repair where prices will fall back to a more sensible level, taking traders with them.
As part of the financial industry, the market disruption may be a significant reason for concern. For example, banks rely on prepared access to the loan through interbank loans to finance their operations, expand their loan to customers, and participate in other market activities. If they suddenly cannot gain access to the loan or cannot find a loan at reasonable interest rates, they may experience disruption of business, and could be endangered by failure is that the market disturbance is not correct in time. Some banks may trigger the so -called provisions on events of disruptionThe market in contracts with business partners, if they feel they have to retreat from the contract because of market problems.
predicting the course of markets can be demanding, although traders, regulators and analysts will certainly try. The warning signals that there is a market disturbance on the horizon may include a market that seems to be a softening, political situation that changes or traders who behave unusually. Corrective measures to resolve possible disruption may include trading restrictions if prices rise or fall too fast or temporarily closing markets to prevent disaster.