The Intraday Price Stabilization Measure

One big order sweeps several price levels

With trade-by-trade matching, one big order can eat through several price levels at once and the price jumps sharply in an instant. The intraday price stabilization is a speed bump for exactly that.

Delayed about 2 minutes, switched to a call auction

If the next indicative trade price would move more than about 3.5% from the previous trade, matching is delayed for about 2 minutes and switches to a call auction, then everything is matched at one price when time is up (check the exchange's rules for the numbers).

Not the same as price limits

The price limit caps how far a stock can move in a day (±10%); the intraday price stabilization measure deals with sudden jumps. The latter doesn't stop the price from changing; it just slows trading down.

Key takeaways

• With trade-by-trade matching, one big order can sweep several price levels at once; the price stabilization measure is a speed bump for exactly that.
• If the next indicative trade price would move more than about 3.5% from the previous trade, matching is delayed for about 2 minutes and switches to a call auction (check the exchange's rules for the numbers).
• It doesn't stop the price from changing; it stretches an instant into two minutes so people can digest the news and re-quote.
• It's not the same as the daily ±10% price limit: one handles sudden jumps, the other how far a stock can go in a day.

Try it yourself

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

1. Press ▶: at which minute does it first trigger? How does the trade price change after that?
2. Reduce the “sudden jump” to +8%: does it still trigger? Why?
3. Set it to −25% and play: how many times does it trigger in total? Where does the price end up?
4. Compare the dashed and solid lines: did the mechanism change the final direction of the price?

Quiz and explanations

1. What does the intraday price stabilization measure mainly guard against?

Answer: The intraday price jumping too far in an instant because of one big order.It targets sudden big jumps during trade-by-trade matching, which is separate from the daily price limit.

2. What happens once it triggers?

Answer: Matching is delayed about 2 minutes and switches to a call auction, then continues.Orders can keep coming in during the delay; when time is up a call auction sets one price, and trade-by-trade matching resumes.

3. After it triggers, where does the price end up?

Answer: It may keep going the same way; the mechanism only slows trading down.The mechanism only slows things down and doesn't decide the direction; if supply and demand really changed, the price keeps moving after trading resumes.

Terms in this lesson

• call auction (Call Auction): Orders are collected for a while without trading, then all matched at once at a single price, often used at the open and close.
• price limit (Price Limit): Some markets cap how far a stock can move in a day (±10% for most Chinese main-board stocks); hitting the cap is limit-up, hitting the floor is limit-down.
• intraday price stabilization (Intraday Price Stabilization): During Taiwan's trade-by-trade matching, if the next indicative trade price would move too far from the previous trade, the exchange delays matching for about 2 minutes and switches to a call auction before trading resumes.
• 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.