The proposal remains under an active exam.
Securities exchanges are actively setback tests and optimize volatility control bands based on models to curb erroneous shops triggered by errors of ‘big toe’ errors caused by the incorrect entry of the numbers while placing orders for sale of water comedies
The Bag Board and Exchange of India (Sebi) had floated the idea last year, proposing that exchanges adopt narrow price ranges within the broader intradic of 2 to 20 percent for shares in the cash segment to improve ordered price bands. The objective is to limit the changes in the prices of subdue caused by the input errors, without affecting the negotiation range executing an action.
The proposal remains under an active exam. NSE and BSE are internally experimenting with a various model configuration designed to create “impact walls”, with automated mechanisms that contain acute and involuntary volatility caused by human error, said a conscious source of discussions.
“The mechanism will take time, the exchanges of values are working on it. Different models are being developed, tested in historical and optimized data based on the observed results,” said the source.
Control bands
Once implemented, the volatility control bands will allow only those orders that fall within a pre -established percentage of the last negotiated price (LTP). It is likely that orders that fall outside the specific range are rejected. These bands will be dynamically restored every 15 to 30 seconds, adjusting to the last LTP in real time, said another source.
For example, if an action has an LTP or ₹ 1,000 and a 10 percent volatility control band is in force, orders would be accepted only within the range of ₹ 900 – ₹ 1,100. If the LTP moves to ₹ 1,100 after 30 seconds, the updated band would change accordingly ₹ 990 – ₹ 1,210.
The specific width of the band and the reset frequency can also vary according to the liquuidity of an action and negotiation volumes. An email sent to Sebi in search of comments remained unanswered.
System update
The system is also being designed to adapt to unusual market conditions. In days with important news events, or when the thresholds are infringed, such as high -order rejections or an increase in unique customer codes, bands can be temporarily stimulated to accommodate larger operations and maintain ordered operation.
Once an adequate model is finished, the exchange systems will be updated to generate thesis control bands, which will be implemented so that the runners consume gradually. The entire exercise is expected to take four to six months, with the final implementation, the end of the year will probably move, an exchange official said.
It is expected that the implementation will follow the usual Sebi route, first through a discussion document, and then through a circular, similar to the process followed for existing dynamic price bands.
Posted on April 13, 2025