Do price limits inhibit futures prices?

@article{Shanker2008DoPL,
  title={Do price limits inhibit futures prices?},
  author={Latha Shanker and Narayanaswamy Balakrishnan},
  journal={2008 IEEE International Symposium on Parallel and Distributed Processing},
  year={2008},
  pages={1-5}
}
We investigate the effect of daily price limits, which trigger a trading halt if the limit is hit, in futures markets. Empirically, it has been observed that futures price limits are rarely hit. This could be because traders avoid putting in bid-ask quotes which could trigger a trading halt. If this is true, futures prices would cluster in a narrow region… CONTINUE READING