A volatility interruption is an automatic safeguard on an exchange that stops continuous trading in a single security and starts a short auction when the next trade would take place outside a set price range. The range is usually defined in two ways: a dynamic range around the last traded price, which catches sudden jumps, and a wider static range around a reference price such as the last auction price.
During the interruption, orders are collected without being matched and an indicative price is displayed. After a few minutes, with a random end to deter manipulation, a single price is set and normal trading resumes; if that price is still far from the reference, the auction may be extended. The process works like a brief opening auction. It is a security-level form of circuit breaker, milder than a trading halt because price formation continues. MiFID II requires venues to have such controls.