What are trading safeguards?

Trading safeguards are procedures set by an exchange to mitigate the risk of disorderly trading, and include the following:

• Market-wide circuit-breakers (trading in all securities is temporarily halted whenever certain price thresholds/collars are breached);
• Single-security circuit-breakers (trading in a security is temporarily halted whenever certain price thresholds/collars are breached);
• Pre-trade confirmation requirement (market participants are required to confirm orders that lead to the breach of certain price thresholds/collars)
• Pre-trade erroneous order rejection (if a market participant places an abnormally large order, it gets automatically rejected before entering the order book);
• Post-trade erroneous trade cancellation (if some trades occur at extreme prices, they may be cancelled a posteriori).

Euronext Trading Safeguards

According to the Euronext's "Trading Manual for the OPTIQ Trading Platform 04/feb/2019", Euronext markets' safeguards include:

• A pre-trade confirmation system that applies to the securities included in the main national equity indices (AEX, BEL20, CAC40, ISEQ 20, PSI 20), through which a market participant is given 30 seconds to confirm the order;
• A reservation system through which trading is reserved for periods of at least 3 minutes.

Such mechanisms are based on two types of collars:

• Static Collars, which, in most situations, are established in reference to the opening price (or to the previous closing price if the security has not been traded yet);
• Dynamic Collars, which, in most situations, are established in reference to the last traded price.

Euronext does not have market-wide circuit-breakers.