Market trading and volatility

Market trading and volatility FAQs 

Find out more about ASX’s rules and processes that help satisfy our obligations to operate fair, orderly and transparent markets 

Why are circuit breakers not used in Australian exchanges such as ASX? 

ASX does not use circuit breakers like those employed by some other international exchanges. 

ASIC applies a common set of market integrity rules (MIRs) for all securities and futures markets in Australia that all local market operators and their participants are required to adhere to. 

These rules include specifications about the use of Anomalous Order Thresholds (AOTs), rather than circuit breakers. 

What are Anomalous Order Thresholds (AOTs)? 

Anomalous Order Thresholds (AOTs) calculate reference prices and limits for all ASX securities (shares, company options, exchange traded funds (ETFs), managed funds products, CHESS depositary interests (CDIs), Commonwealth Government Securities and interest rate securities). 

The AOT Reference Price is updated every minute and prevents the placing of aggressive orders (an order +/-10% the reference price). 

Note: Different limits are applied to securities below $2.35. 

We will also pause trading in individual stocks for two minutes if the price triggers the Extreme Trade Range (ETR) mechanism, which is unique for every stock. 

We believe the AOT-ETR mechanism promotes orderliness by striking a balance between restricting large and sudden price movements, while allowing natural market forces to guide trading.  

How does ASX apply Trade Cancellations, Order Limits and Regulatory Halts? 

ASX has established rules that are consistent with our operating rules and regulatory obligations. As a result ASX only allows trade cancellations, or will enforce cancellations, as set out in ASX and ASX 24 Rules and Procedures 3200 – 3210. 

ASX also enforces order limits for certain products set out in ASX Rule and Procedure 3260. 

ASX will impose a Regulatory Halt Session State on certain products under the conditions set out in ASX Procedures 3210 and 3260. 

Why does ASX remain open during periods of volatility? 

All ASX equity, fixed income and derivative markets remain fully operational and open during regular trading hours. 

Exchanges play an important role in the economy. In times of uncertainty and high volatility, it is particularly important to offer a platform for investors to manage their risks by providing the ability to transfer risk through trading and for companies to continue to raise capital. 

Remaining open and ensuring continuity of markets supports price discovery and risk transfer, which are critical in periods of heightened volatility. 

ASX operates in close contact with the regulator (ASIC) and has a range of measures to maintain the market’s orderliness and resilience.