Chinese regulator promises no relaunch of circuit breaker mechanism in the next years

After turbulence rattled Chinese stock market early this year, first forcing the implementation and then the suspension of a circuit breaker mechanism, the nation’s securities regulator has updated on the potential use of the controversial mechanism.

Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC), was quoted by Xinhua as saying that China will not relaunch the circuit breaker mechanism in its stock market in the next several years. The statement was made on Saturday (March 12, 2016).

The CSRC suspended the mechanism on January 8th because “it failed to achieve the anticipated effects”.

The circuit breaker was introduced to tame sharp fluctuations of the Chinese stock market. The idea behind it was to force trading to be halted for 15 minutes if the Hushen 300 Index moves up or down by 5% before 2:45 p.m. If the movement reached 7% when trading is resumed, the market would close for the day.

The circuit breaker was activated on January 4th and January 7th, as the drop in the Hushen 300 Index reached 7%.

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