Stock exchanges around the world introduce rules and regulations from time to time in order to protect and sustain the market activity in the long-run. One such rule is Quantity Freeze. It helps to regulate the flow of orders within a certain specified quantity and avoid flash moves in either direction. Any order size above the pre-defined limits will be automatically rejected by the exchange and the limits available in the client ID will be blocked for the rest of the day to ensure that such breaches do not occur.

Logic of Quantity Freeze

In a busy marketplace in which transactions are happening every split second, things can go haywire if the flow is disrupted by disproportionately large buy/sell orders. Whether these orders are placed by large non-institutional players, rogue traders or it happens by accident, it can affect the short-term prices of the underlying derivative contract. For instance, assume that a trader sends an order to sell/short 20,000 Nifty Bank futures by mistake instead of 200. Let’s also assume that he has the limits in his account to fulfill the margin for that trade. By mistake, he would’ve put himself at huge risk and in the process disrupted the order flow for other traders. This is referred to as a fat finger trade and we’ve seen such errors happen in the markets before. A quantity freeze ensures that such mishaps do not happen and trading activity goes on as usual. If traders want to buy or sell large quantities beyond the freeze limits, then they will have to slice it into smaller orders.

Information on Quantity freeze limits

From time to time (almost once a month) when there are revisions in the quantity freeze limits, NSE publishes these revisions via circulars. Here is a sample. The current quantity freeze limits can be checked here

Here is what you can do to overcome the quantity freeze limits set by the Exchange

Place multiple orders using the basket order feature

Apart from Exchanges, Navia has also set maximum quantity and Value limits at exchange to protect its client’s interest.