The Taiwan Futures Exchange has begun rolling out a new, dynamic price-banding system on selected contracts, which Taifex executives hope will add more price stability to the market.
All spot month contracts and next calendar month contracts for Taifex futures and Mini-Taifex futures will be covered by the new mechanism. Taifex’s matching engine will check each new order and reject any order far above or below the current price or simulated price, based on the current order book. To be approved, the bid will need to be within 2% of the last closing price of the underlying index on a spot monthly contract and 1% of the last closing price of the underlying index for the next calendar month contracts.
The new system aligns Taifex with standard practice at most other futures exchanges, according to an exchange release.