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Post Date : July 10, 2025
In order to ensure orderly trading and protect investors from extreme price fluctuations or erratic orders, NSE (National Stock Exchange) has implemented two key price control mechanisms:
Though both serve risk management purposes, they operate differently and apply to different market conditions. Here’s a clear distinction between the two:
The F&O Execution Range was introduced in 2014 to prevent trades from occurring at irrational prices, especially in illiquid contracts. This range ensures that market orders in Futures & Options (F&O) are only executed if they fall within a specified price band relative to the live market price.
Note: If an order is placed outside the execution range, it will be rejected by the system.
Circuit Limits, also known as price bands, are designed to control excessive volatility and potential price manipulation in both F&O contracts and equity stocks. These limits set the maximum permissible upward or downward movement for a security on any given trading day.
Circuit limits are crucial in maintaining market integrity, especially during extreme volatility.
Feature | F&O Execution Range | Circuit Limits |
Applies to | F&O contracts only | Stocks and F&O contracts |
Purpose | Prevent erratic trades in illiquid contracts | Prevent extreme price movements |
Dynamic or Static | Dynamic – updates every minute | Static – fixed for the day unless revised by NSE |
Trigger Action | Orders outside range are rejected | Trading halts or restrictions applied |
Controlled By | Automated system logic | NSE intervention required to revise |
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