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New research from the European Securities and Markets Authority (ESMA) finds that trading circuit breakers are effective at curbing damaging market volatility.

The European regulator released the results of a study that examines a real-time database of circuit breakers triggered between April and December 2016 for 10,000 financial instruments.

The review period included several events that triggered market stress, the study noted, including referendums in the U.K. and Italy, the release of bank stress test results and a U.S. presidential election.

The study found that the use of circuit breakers in response to sudden, drastic price volatility “significantly” reduced that source of market instability.

However, the use of circuit breakers also results in wider bid-ask spreads. “Calmer trading conditions come at the cost of higher spreads,” the study found. Yet, the study also concluded that the price discovery process was “not negatively affected.”

“On the contrary, we find that [circuit breaker] auction prices provide incremental information for participants helping to return to orderly trading,” ESMA said.

Additionally, the study found that trading in instruments that are cross-listed experienced a “hidden circuit breaker” when a trading halt was triggered on the primary listing venue.

“Despite being in continuous trading, trading activity on the satellite market decreases drastically and liquidity dries up as investors refrain from trading waiting for the reference market to set the [circuit breaker] auction price,” ESMA said.

“There is no systematic diversion of liquidity from reference to satellite markets, when a [circuit breaker] is triggered on the reference market,” it found.