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BM&FBovespa plans intraday price limits

14 September 2010  |  1378 views  |  0 Source: BM&FBovespa

BM&FBovespa will implement as of September 27 a new +/- 15% limit on price fluctuations in shares, ETFs and other assets traded on the spot market.

Named the intraday limit, the new tool will establish minimums and maximums, based on a reference price for each asset. The reference price will be the previous session's closing quote, when considering the asset at the start of the day before the first trade, or the price of the day's first trade. The asset's reference price will be altered during the session if there is an auction sparked by the intraday limit being breached. In this case the reference price will become whatever results from the auction.

The new tool will function in the following manner: if a transaction results in a price breaching the upper or lower intraday limit it will be halted and the asset will be put up for auction. The intraday limit will not stand in the case of auctions. In other words, the price resulting from an auction can breach the newly-established limit. It is also important to emphasize that the intraday limit represents an additional control to, and not a substitution of, the existing limit on price fluctuations on consecutive transactions (price limit in relation to the last transaction executed), which has already been implemented in the Mega Bolsa system.

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