Stock Price Formulation

Is it possible for stock prices to jump suddenly, for example from 1,000 yen to 1,100 yen?

Update : Jan. 04, 2010

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Answer :

Stock prices are constantly fluctuating from moment to moment. However, if prices make sudden leaps, such as from 1,000 yen to 1,100 yen, investors placing market orders can find their orders being executed at unexpected and unfavourable prices, leading to heavy losses. All of which makes it difficult for both securities companies and investors to judge the timing for placing orders.

On the TSE market, an immediate execution only takes place if the next execution price is within certain parameters based on the previous execution price. These quote parameters are determined as a chart below.

Thus for example, if the most recently executed price was 500 yen , the next execution price must be within the range 490~510 yen. In other words, it may only fluctuate up to 10 yen in either direction.

So what happens when the next execution looks likely to take place at a price beyond these quote parameters, for example at 550 yen when the preceding price was 500 yen? In such instances execution does not take place. Instead, TSE indicates a special quote, which helps to make a smooth transition between such widely divergent prices. (For more details about special quotes, please see 'What is a 'special quote', and how does it work?'.)

Quote Parameters

Current price (yen) Parameters (yen)
(±)
Less than 200 5
Equal to or more than 200 - Less than 500 8
Equal to or more than 500 - Less than 700 10
Equal to or more than 700 - Less than 1,000 15
Equal to or more than 1,000 - Less than 1,500 30
Equal to or more than 1,500 - Less than 2,000 40
Equal to or more than 2,000 - Less than 3,000 50
Equal to or more than 3,000 - Less than 5,000 70
Equal to or more than 5,000 - Less than 7,000 100
Equal to or more than 7,000 - Less than 10,000 150
Equal to or more than 10,000 - Less than 15,000 300
Equal to or more than 15,000 - Less than 20,000 400
Equal to or more than 20,000 - Less than 30,000 500
Equal to or more than 30,000 - Less than 50,000 700
Equal to or more than 50,000 - Less than 70,000 1,000
Equal to or more than 70,000 - Less than 100,000 1,500
Equal to or more than 100,000 - Less than 150,000 3,000
Equal to or more than 150,000 - Less than 200,000 4,000
Equal to or more than 200,000 - Less than 300,000 5,000
Equal to or more than 300,000 - Less than 500,000 7,000
Equal to or more than 500,000 - Less than 700,000 10,000
Equal to or more than 700,000 - Less than 1,000,000 15,000
Equal to or more than 1,000,000 - Less than 1,500,000 30,000
Equal to or more than 1,500,000 - Less than 2,000,000 40,000
Equal to or more than 2,000,000 - Less than 3,000,000 50,000
Equal to or more than 3,000,000 - Less than 5,000,000 70,000
Equal to or more than 5,000,000 - Less than 7,000,000 100,000
Equal to or more than 7,000,000 - Less than 10,000,000 150,000
Equal to or more than 10,000,000 - Less than 15,000,000 300,000
Equal to or more than 15,000,000 - Less than 20,000,000 400,000
Equal to or more than 20,000,000 - Less than 30,000,000 500,000
Equal to or more than 30,000,000 - Less than 50,000,000 700,000
50,000,000 or more 1,000,000

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