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With arabica, sugar volatile, ICE tweaks trading limit rules

NEW YORK, Feb 27 (Reuters) - ICE Futures U.S. on Thursday broadened its rules designed to limit volatility for the second time in a week, as its coffee and raw sugar markets face unusual volatility, with arabica marking its biggest monthly surge in 20 years.

The exchange said it will reject limit orders placed outside of the maximum trading range designed to prevent "fat finger errors" by errant traders starting March 10. The amendment to the rule, called a reasonability limit, means that any limit order to sell below the limit or to buy above it, at the time the order is entered, will be rejected.

Currently, certain conditions allow some of these orders to be accepted.

This latest revision comes just a week after the exchange raised the reasonability limit levels for its arabica coffee futures contracts as the market became increasingly volatile, with speculative buying pouring into the market on concern about drought damage in top grower Brazil.