VI: Pausing When the Price Jumps Too Hard

Too sharp a jump: pause 2 minutes first

When a stock's price moves far from its reference price in a short time, the volatility interruption (VI) halts continuous trading for about 2 minutes and switches to a single-price auction (dongsi-hoga), so people can digest the news and re-quote before trading at a single price.

Static VI: compared with a fixed reference

The static VI looks at how far the price has moved from a fixed reference, such as the opening price or the last single-price auction, and triggers if it strays too far (threshold about ±10%, illustrative).

Dynamic VI: compared with the last trade

The dynamic VI looks at how far the price suddenly jumps from the last trade, for example when one big order eats through several price levels (the threshold is only a few percent, illustrative). It can trigger more than once a day.

Key takeaways

• Once a VI (volatility interruption) triggers, continuous trading pauses for about 2 minutes, switches to a single-price auction, then resumes.
• The static VI compares with a fixed reference price (such as the opening price or the last single-price auction); the dynamic VI compares with the last trade.
• A VI doesn't stop the price from changing; it stretches an instant into a few minutes, cutting extreme trades caused by fat fingers and panic, and it can trigger more than once a day.

Try it yourself

You can do these exercises in this lesson's interactive simulation:

1. Press ▶ with the static VI: at which minute does it trigger? Does the trade price change during the pause?
2. Switch to the dynamic VI and play: does it trigger earlier or later? How many times?
3. Set the “sudden jump” to +8%: does the static VI still trigger? What about the dynamic VI?
4. Compare the solid and dashed lines: did the VI change where the price ended up?

Quiz and explanations

1. What happens when a VI triggers?

Answer: Continuous trading pauses for about 2 minutes and switches to a single-price auction.After a VI triggers, orders are collected without trading for about 2 minutes, matched at one price when time is up, and continuous trading resumes.

2. What's the main difference between the static VI and the dynamic VI?

Answer: The static VI compares with a fixed reference price, the dynamic VI with the last trade.The static VI looks at how far the price is from a fixed reference like the opening price; the dynamic VI looks at how far it suddenly jumps from the last trade.

3. Which statement about VI is correct?

Answer: It just pauses the market for a few minutes to re-quote; afterwards the price still moves with supply and demand.A VI only slows the pace of price changes; after the pause the price follows supply and demand as usual, and it can trigger again the same day.

Terms in this lesson

• dynamic VI (Dynamic VI): A volatility interruption triggered when the price jumps too sharply from the last trade within a very short time (for example one big order eating through several price levels); it also pauses trading for about 2 minutes and switches to a single-price auction.
• single-price auction (dongsi-hoga) (Single-Price Auction): Korea's call auction: for a period orders are collected without trading, then matched all at once at a single price. There's one before the open and one before the close, and it's also used after a VI is triggered.
• static VI (Static VI): A volatility interruption triggered when the price moves too far from a fixed reference (such as the opening price or the last single-price auction); continuous trading pauses for about 2 minutes and switches to a single-price auction.
• volatility interruption (Volatility Interruption): When a stock's price moves too far from a reference price in a short time, the exchange pauses continuous matching for a few minutes and switches to a call auction or a limited price band, so prices can't spin out of control in an instant.