Trading may be temporarily interrupted during the opening session or during continuous trading in the event of unusually sharp price fluctuations. Trading safeguards control price fluctuations by means of a set of formal mechanisms such as volatility interruptions (freezes, reservations), thresholds and reference prices.
There are two levels of trading safeguards:
The static safeguards apply to all Euronext listed instruments and are used to detect a major price movement occurring in several small steps over the trading session.
The static safeguards specify the maximum amount that each instrument is allowed to deviate from its static reference price. During the opening auction, the static reference price is the last traded price (usually the previous day’s closing price, adjusted if necessary to account for coupon payment) or the last indicative price disseminated.
During the trading session, dynamic safeguards only apply to Euronext’s continuously traded instruments. They are aimed at keeping price volatility within the static safeguards.
Every traded price becomes the dynamic reference price used to determine the minimum and maximum thresholds for the next traded price.
|Mode||Bond Type||Thresholds & Interruption|
|Convertible Bonds||Continuous/ Double Action||All||10%||2%||20 sec|
|Single Auction||State Bonds||2.5%||-||-|
|Single Auction||State Bonds||5%||-||-|
|Single Auction||Corporate Bonds||2%||-||-|
|Double Auction||Corporate Bonds||2.5%||-||-|
|Double Auction||Other Bonds||1%||-||-|