Chinese stock exhanges plan to install bourse-wide ‘circuit breakers’ to prevent panic selling
A-share exchanges air plans for trading circuit breakers to prevent the massive swings that have left investors reeling in recent months
Mainland stock exchanges plan to install bourse-wide "circuit breakers" to stop panic selling after botched official efforts to stop plunges in the volatile A-share market.
Beijing is also preparing to deleverage the market, determined to rid it of the speculative funds that helped drive the recent boom-to-bust share cycle.
The regulators are willing to do anything to restore investor confidence
The stepped-up intervention bodes ill for market reforms. Charles Li Xiaojia, chief executive of Hong Kong Exchanges & Clearing, said authorities were expected to delay the long-heralded Shenzhen-Hong Kong stock connect scheme.
Under the new plan, the Shanghai and Shenzhen stock exchanges will halt trading for 30 minutes when the CSI300 index that tracks the 300 biggest mainland-listed firms jumps or slumps 5 per cent in intraday trading. They will stop for the day if it soars or dives by 7 per cent, the exchanges said yesterday.
The circuit breaker system also applies to CSI300 index futures at the China Financial Futures Exchange in Shanghai.
The public will have until September 21 to give feedback on the idea.
The announcement of the circuit breakers came just a day after the China Securities Regulatory Commission said it was "studying" plans for such a system.