Which statement is true regarding volatility interruptions or auctions?

During volatility interruptions or auctions, the potential auction price being published serves a crucial role in providing market participants with transparency about the current state of the market. By making this information available, traders can make informed decisions based on the anticipated auction price, which reflects the collective order flow and the fluctuations in supply and demand.

This practice encourages liquidity and allows participants to gauge how their orders might be affected by the prices at which the auction will be executed. Understanding the potential auction price can mitigate uncertainty and help traders strategize their actions leading up to and during the auction period.

The other statements do not align with the established protocols during volatility auctions. For instance, while best bid/ask limits may change during disruptions, they are often still communicated in a way that fosters market awareness. Parameters for validating execution prices are typically established and shared, but they may not be as prominently published as the potential auction price. Additionally, the matching process during a volatility auction does have unique characteristics designed to handle the specific market conditions, but it operates within the overarching framework of the exchange’s standard auction procedures, rather than being entirely separate.

Overall, the practice of publishing the potential auction price enhances market integrity and participant engagement.