Price banding
Price banding is a CME Globex check that rejects buy orders priced more than a fixed band above the market's reference price and sell orders more than the band below it. It stops erroneous orders from trading far away from the market, without capping how far the market itself can move, because the band follows the reference price.
Senzoukria · Glossary · Updated September 2026
Definition
CME describes price banding as a mechanism that subjects orders to price validation and rejects orders outside the band, preventing antagonistic or erroneous orders, such as limit bids well above the market or offers well below it, from causing market-moving trades that would later need to be cancelled. It rejects buy orders above the CME last price plus a fixed band value and sell orders below the last price minus that value.
The reference price
The reference used to place the band is derived from the most recent transaction, the best bid or offer, the settlement price, or in implied markets the implied bid or offer. During the pre-open, the settlement price is the reference until an indicative opening price is computed.
Worked example
Hypothetical band of 100.00 points with a reference price of 5,000.00. A buy limit at 5,120.00 is above 5,100.00 and is rejected; a buy limit at 5,080.00 is accepted. A sell limit at 4,880.00 is below 4,900.00 and is rejected. Orders on the passive side, such as a buy far below the market, are not affected: banding is about orders that would trade through the market.
Banding versus limits
- Banding rejects individual orders; limits bound the prices at which any trading can occur.
- CME notes that banding will not lock up the market, because the band moves as bids and offers are entered.
- When both apply, price limits and circuit breakers take precedence over banding.
In Senzoukria
The order ticket validates what it can check locally, a positive whole quantity and the prices each order type requires, and the backend applies the connection's guards. Anything decided further along, including exchange-level price validation, comes back from the broker as an acceptance or a rejection, and the ticket shows the status it receives.
Common mistakes
- Typing a limit price with an extra digit and reading the rejection as a platform fault.
- Confusing a banding rejection with a price-limit halt.
Related
In the same section
- Busted trade
- Price discovery
- Pre-trade risk checks
- Price level grouping
- Pre-open and IOP
- Price-time priority
- Post-only order
- Prior session levels
Sources
- CME Group Client Systems Wiki: Limits and Banding (2026-09-25)
This page in other languages
Frequently asked questions
- Why was my limit order rejected when the market was open?
- One common reason is that its price was outside the exchange's band around the reference price, for example a buy entered far above the market by mistake. The rejection text from the broker usually states the reason.
- Does price banding stop the market from falling fast?
- No. The band follows the reference price, so the market can move any distance as long as orders keep arriving within the band. Limits and other controls are what bound large moves.