Comparative Analysis of Price Limits and Trading Halts in Stock Market Reactions to Geopolitical Risks: Evidence from Iranian Capital Market

Stock markets exhibit heterogeneous reactions to geopolitical risks, largely depending on market structure and the regulatory mechanisms in place. Price limits, defined as constraints on the maximum daily price fluctuations, and trading halts, which temporarily suspend trading activities, are among the most important tools used to manage volatility in financial markets. The aim of this study is to examine and compare the role of these mechanisms in stock market responses to geopolitical risks, with a particular focus on the Iranian capital market. The main research objective is to evaluate the effectiveness of these tools in controlling volatility and their impact on the price discovery process during periods of crisis. This study adopts a descriptive–analytical approach and is based on library research and a review of both domestic and international academic sources. The importance of this research lies in its potential to enhance policymaking and improve market efficiency by providing insights into the effectiveness of regulatory tools. The findings indicate that while these mechanisms may reduce volatility in the short term, they tend to delay price discovery and transfer volatility to subsequent periods, ultimately reducing market efficiency in the long run.

کلیدواژه ها:

Price Limits ، Trading Halts ، Geopolitical Risk ، Iranian Capital Market ، Price Discovery ، Market Efficiency