Velocity logic watches how fast price travels within a defined interval. If the move exceeds the threshold, matching stops for a brief reserved state — usually a few seconds — during which orders can be entered and cancelled but nothing trades.
The purpose is to break the cascade in which stop orders trigger more stops with no resting liquidity in between. Traders see it as a sudden freeze with the ladder emptied and then a reopen at a different price.
Example: a headline hits and ES drops 30 points in under a second. Globex pauses briefly, participants re-post bids, and trading resumes rather than free-falling through an empty order-book.
Related: price-banding, trading-halt, circuit-breaker, order-book, slippage