In a competitive electricity market, where market parties try to maximize their profits, it is necessary to keep an acceptable level of power system security to retain the continuity of electricity services to customers at a reasonable cost. Congestion in a power system is turned up due to network limits. After relieving congestion, the network may be operated with a reduced transient stability margin because of increasing the contribution of risky participants. In this paper, a novel congestion management method based on a new transient stability criterion is introduced. Using the sensitivity of corrected transient stability margin with respect to generations and demands, the proposed method so alleviates the congestion that the network can more retain its transient security compared with earlier methods. The proposed transient stability index is constructed considering the likelihood of credible faults. Indeed, market parties participate by their security-effective bids rather than raw bids. Results of testing the proposed method along with the earlier ones on the New-England test system elaborate the efficiency of the proposed method from the viewpoint of providing a better transient stability margin with a lower security cost. Crown Copyright (C) 2009 Published by Elsevier Ltd. All rights reserved.