What is a daily limit?

The price limit system originated from the early foreign securities market. In order to prevent soaring transaction prices and suppress excessive speculation, a trading system that appropriately limits the price increase and decrease of each securities on the current day, that is, the maximum fluctuation of the transaction price on a trading day is a few percent of the closing price on the previous trading day, the transaction will be stopped after it is exceeded.

China's securities market's current limit system was launched in December 13, 1996 and implemented in December 26, 1996. The system stipulates that, except for the first day of listing, the trading prices of stocks (including A and B shares) and Fund-type securities within one trading day shall not exceed 10% as compared with the closing price on the previous trading day, the Commission exceeding the limit is invalid.

Later, the China Securities Regulatory Commission stipulated that, after adding ST's hats to companies that have suffered losses for two consecutive years, ST's rise or fall was separately set to be between 5% to prevent such stock fluctuations.