What is the function of dynamic volatility interruptions?

Dynamic volatility interruptions serve a crucial role in maintaining market stability by preventing trading when prices experience significant deviations. These interruptions help to manage extreme price movements that could be caused by excessive volatility or sudden market shifts, effectively acting as a buffer during turbulent periods. By halting trading temporarily, these mechanisms provide participants with the opportunity to assess market conditions, which can lead to more informed decision-making and ultimately a healthier trading environment.

The purpose is to restore order and confidence in the marketplace, minimizing the risk of disorderly trading and ensuring that prices reflect a more stable equilibrium once trading resumes. In doing so, dynamic volatility interruptions contribute to the overall integrity and fairness of the trading process.