One of the problems observed during the height of the crisis in October 1997 was that of maintaining pricing efficiency in the face of greater global market volatility, which led to greater uncertainty and a flux of disparate views on the nature and extent of the market turbulence. This is a vital issue since the timely dissemination of information and the provision of greater access to liquidity remain major reasons for organised exchanges. Distortion of the price-discovery process, particularly during periods of greater uncertainty, can rob investor confidence and, as a result, precipitate further and more serious misalignments in asset prices.

It was argued that the trading halts activated on the New York Stock Exchange (NYSE) on October 27th 1997 contributed to a sense of panic, resulting in the selling that erupted after the resumption of trading following the first halt. Fears of being caught holding illiquid positions and being unable to execute "market-on-close" orders in the event the second trading halt was activated saw traders dumping stocks after the first trading halt ended. Thus, it was argued by some that the very existence of the price floor may have intensified selling pressure resulting in a "magnet effect". After the first 30-minute trading halt was lifted, stocks in the United States continued their downward slide for about 25 minutes, triggering the second circuit breaker at 3.30pm Eastern standard time. This resulted in the halt in trading of all NYSE issues for the remaining 30 minutes left of the session.

Circuit-breakers and other trading restrictions on many exchanges world-wide-including Brazil, Taiwan, Malaysia, Thailand, India, Bangladesh, Japan, Argentina and Hungary-were activated as prices plummeted sharply in the wake of the Dow's fall in October 1997. One market authority acknowledged that the extraordinarily high volatility observed as a result of the regional contagion led to the frequent disruption of the price discovery process in the cash and futures markets, because price limits were breached too frequently. This was also observed in other markets as well, as a result of the greater volatility seen in both the securities and currency markets, particularly in emerging countries. Consequently, the authorities' efforts to smooth violent market movements and inhibit panic during times of heavy selling pressure have come under close scrutiny in view of their impact on liquidity and pricing efficiency.