The SSE (Shanghai Stock Exchange), the SZSE (Shenzhen Stock Exchange) and the CFFE (China Financial Futures Exchange) announced that they would suspend the implementation of index circuit breaker mechanism on Jan 8th to maintain the market stability.
The news spokesman of the CSRC, Deng Ge said that the main aim for introduction the index circuit breaker mechanism was to provide a “calm period” for market to avoid or decrease hurried decisions made under drastic fluctuation and protect the legal rights for investors especially those medium and small investors.
He said that the circuit breaker mechanism was not the main reason for the crash of market. But it seemed not achieve our expectations, judging from these two situations of implementing circuit breaker mechanism. And it has certain “magnet effect”. So currently the negative effects are bigger than positive effects. So it is a wise measurement to suspend the circuit breaker mechanism for the market stability.
After the abnormal fluctuations of stock market in 2015, the circuit breaker mechanism began to be carried out after prudent argumentations and collecting public advices. The circuit breaker mechanism is an entirely new system that we have never tried. The market needs time to adapt, explore, accumulate experiences and adjust.