Brazilian equities and derivatives exchange BM&FBovespa has introduced a new 15% limit on price fluctuations in shares, exchange-traded funds (ETFs) and other assets traded on the spot market.
The new intraday limit establishes minimum and maximum values, based on a reference price for each asset consisting of either the previous session's closing quote or the price of the day's first trade. If a transaction results in a price breaching the intraday limit, it will be halted and the asset will be put up for auction. The reference price will also be altered during the session if there is an auction sparked by the intraday limit being breached.
The intraday limit is an additional control to the existing limit on price fluctuations on consecutive transactions already implemented in the exchange's electronic ”Mega Bolsa' system.
Exchanges globally have been particularly alert to the dangers of extreme volatility in asset prices since the ”flash crash' of 6 May 2010, which briefly wiped US$1 billion off the value of the US stock prices.
Separately, news sources report that BM&FBovespa CEO Edemir Pinto has called for an end to a tax on overseas investors' purchases of equities and bonds, introduced to limit foreign inflows in October 2009.