By signaling the registration of a certain degree of price volatility, based on the demand and supply recorded for a financial instrument, the prerequisites for executing orders increase in case of registration the accentuated fluctuations of the market price for a financial instrument in a short period of time.
This mechanism will be applied within BVB starting with December 2, 2019, for shares in BET and BET-FI indices, as well as for the international shares from the regulated market, replacing the old mechanism of price management under volatility conditions, based on extension of the variation limits.
The mechanism can be activated for a financial instrument in the stages having auction and continuous trading types from its main market, consisting in registration of an unscheduled auction stage, that will allow participants to react to new market conditions by passing the market from a stage having continuous trading type (Open type) to a stage having auction type (Pre-open type) for a short period of time, when the potential price of a trade exceeds a certain limit or by the extension of a stage having auction type, provided that the potential fixing price exceeds a certain limit.
Another concept introduced together with the implementation of this mechanism aims to ensure a random time duration, between a minimum of 3 minutes and a maximum of 3 and a half minutes for the Extended Pre-open (PreopenXT), Volatility Interruption (Vi) and Extended Volatility Interruption stages – for a better neutrality and objectivity of the conditions to determine the market prices.
The application of this mechanism at the level of the main market of a financial instrument implies a correlated approach also at the level of its Deal market, by applying static variation limits, which are calculated having as mark the reference price for the static tunnel from the main market.