price limits

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1. The maximum amount of price change a futures contract is allowed to undergo on a given trading day. Limits are mandated by the exchanges on which futures contracts trade, and exist in order to reduce volatility in the market. It is also called a trading limit.

2. The maximum number of transactions in commodities that an individual may make on an exchange on a given trading day. Limits are mandated either by the Commodity Futures Trading Commission or by the exchanges on which commodity contracts trade. It is also called a trading limit.

3. See: Limit order.

Price Limit

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

price limits

For a given futures contract, the maximum price change from the previous day's settlement price that is permitted during a trading session. These limits are sometimes adjusted in fast-moving markets.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
The Nigerian Stock Exchange (NSE) introduced daily stock price limits and trading halts as a way of stabilizing the stock market after it crashed following the global financial crisis in 2008.
Equation (12) is the censored law of price limits. It demonstrates that when the sum of balanced return of trading day t and residual return of trading day t - 1 is not in ([L.sub.d], [L.sub.u]) the observed return will be censored.
Starting in the early nineties, price limits became commonplace in stock markets around the world (Table 1).
At the financial committee of the Legislative Yuan, Chi Shieve, TSE chairman, pointed out yesterday (March 15) that the existing price limit blocks the linkage of the domestic bourse with the international market, since the U.S.
To date, provisioning for increased bad debts by the listed companies has been very modest." Deflation could also be an issue for the sector in the short term as price limits are linked to Retail Prices Index inflation -currently negative - plus an allowance for individual companies.
Because the Chinese government imposed daily price limits to stabilize its markets on December 16, 1996, the sample period is separated into pre-price-limit periods and post-price-limit periods.
"At the end of last week we received Ofwat's final determination of our price limits for the next five years.
Theoretically, however, it is not clear whether the imposition of price limits will bring about the desired effect of reducing stock market volatility.
other than general maintenance and repair) may qualify for a partial exemption so long as such improvements do not increase the overall assessed value of the home by more than 15% of SONYMA's price limits.
He says although the 40-year-old organisation's chief activity is fixing crude oil price limits and production quotas, OPEC was also created to "avoid damaging competition between member-countries".
Among other changes, TOCOM will allow traders to set price limits for each contract month for customer orders ahead of those for trading on their own accounts.
Circuit breakers are often triggered by specified price movements and include the imposition of price limits in futures markets, the New York Stock Exchange's (NYSE) Rule 80A which restricts the use of the NYSE's Designated Order Turnaround System for index arbitrage orders and trading halts in stock and futures markets.