Trading curb

A volatility interruption (English volatility interruption or Circuit Breakers ) is a capital market event in which due to showy large deviation of an indicative share price due to low liquidity or highly price sensitive events in the continuous trading is temporarily interrupted ( stop trading ).

Background

As a protective mechanism, the volatility interruption serves to protect buyer and seller from unusually high premium or a discount, which could for example also result from an incorrect entry price limits. The volatility interruption is triggered here by the relevant Exchange, if an indicative price deviates too far from current trade prices. An indicative price is the price at which the securities due to the appropriate matching of supply and demand ( matching) could be traded. Depending on the level and degree of volatility interruption trading is suspended for a short-term auction a few minutes or until the Exchange is satisfied by our request for the accuracy of the commandments.

One of the main tasks in volatility interruptions comes to the Designated Sponsors. These represent immediately after occurrence of the interrupt corresponding buying and selling prices that approximate the liquidity of the traded title.

Fast Market

In special market phases if, for example, particularly turbulent trading is expected many exchange operator can have a so-called " fast market " for a product, Produktguppe or the entire market exclaim. Thanks to this, the protective mechanism of the volatility interruption is somewhat mitigated by the boundaries be extended for the interruptions. This larger price deviations are possible for the last courses without a volatility interruption occurs.

In the context of the financial crisis from 2007, the Fast Market Rules have been applied for example for the trading system Xetra repeated.