If the price deviation relative to the reference price is too large, what action is taken depending on whether trading is in an auction or continuous session?

If the price deviation relative to the reference price is too large, what action is taken depending on whether trading is in an auction or continuous session?

• A. Delayed opening for auction, stop trading for continuous trading
• B. Immediate action
• C. No change
• D. If the deviation is too large, delayed opening for auction or stop trading for continuous trading

Answer: (D)

The key idea is that markets have built‑in safeguards when a price moves too far from a reference level. If the deviation is too large, the action depends on the trading mode: during an opening auction, the process is paused with a delayed opening to give price discovery a chance to re-align; during continuous trading, trading is halted to prevent disorder and protect investors while information is absorbed. That conditional rule is best captured by combining both cases: a delayed opening for an auction or a stop in trading for continuous trading. The other options miss this conditional, mode-specific response or imply no change.

The key idea is that markets have built‑in safeguards when a price moves too far from a reference level. If the deviation is too large, the action depends on the trading mode: during an opening auction, the process is paused with a delayed opening to give price discovery a chance to re-align; during continuous trading, trading is halted to prevent disorder and protect investors while information is absorbed. That conditional rule is best captured by combining both cases: a delayed opening for an auction or a stop in trading for continuous trading. The other options miss this conditional, mode-specific response or imply no change.