Stop Logic Functionality Law and Legal Definition
Stop logic functionality is a provision applicable to futures traded on the CME’s Globex electronic trading system. It is designed to prevent excessive price movements caused by cascading stop orders. Under certain market circumstances, stop logic functionality, temporarily pauses the markets for 5 to 20 seconds, allowing market participants the opportunity to provide additional liquidity and permitting the market to regain its equilibrium. Stop Logic Functionality introduces a momentary pause in matching (Reserved State) when triggered stops would cause the market to trade outside predefined values. The momentary pause provides an opportunity for additional bids or offers to be posted.