China set to introduce circuit breaker mechanism to curb stock market swings

China has taken various measures following the “Black Monday” events from August 2015 that rattled the nation’s stock markets…

The latest set of measures against wild swings in the Chinese stock markets was announced today on the website of the Shanghai Stock Exchange (SSE). The announcement says that following an approval from the China Securities Regulatory Commission, the Shanghai and Shenzhen stock exchanges, as well as China Financial Futures Exchange have agreed regulations on a circuit breaker mechanism.

Under the latest regulations agreed, the mechanism will be implemented on January 1, 2016, its main function being the temporary suspension of trading in response to huge increases or drops.

The circuit breaker will react to changes in the Hushen 300 Index, which reflects the performance of the Shanghai and Shenzhen stock exchanges. When the index rises or falls by 5%, the circuit breaker will trigger a 15-minute suspension in stock trading.

If the index moves by 5% after 2:45 p.m., or if the index rises or falls by 7%, trading will be suspended until 3 p.m., or daily trading close time.

To view the full announcement from the Shanghai Stock Exchange, click here.

Read Also: