How ESMA's New Rules Could Tame the Market's Wild Rides

<p>The
European Securities and Markets Authority (<a href="https://www.financemagnates.com/tag/esma/" target="_blank" rel="follow">ESMA</a>) has published new guidance
regarding the use of circuit breakers by trading venues to protect markets
against excessive volatility. Circuit breakers temporarily halt or restrict
trading during periods of significant price movements.</p><p>Why Circuit Breakers Are
Important</p><p>Circuit
breakers serve as an essential safeguard during times of high market volatility
and stress. By temporarily pausing trading, circuit breakers aim to restore
orderly market conditions and give market participants time to reassess
valuations and their trading strategies.</p><p>Recent
events like <a href="https://www.financemagnates.com/cryptocurrency/russia-ukraine-conflict-where-are-bitcoin-and-crude-oil-heading/" target="_blank" rel="follow">Russia's invasion of Ukraine</a> and <a href="https://www.financemagnates.com/institutional-forex/flash-crash-linked-trading-team-at-citigroup-to-be-overhauled/" target="_blank" rel="follow">the May 2022 "flash
crash"</a> led to extreme volatility in commodity derivatives and equity
markets. The presence of well-calibrated circuit breakers can mitigate the
impact of such volatility, providing a controlled environment for market
participants to navigate through uncertain times.</p><blockquote><p lang="en" dir="ltr">