The fuse mechanism, also known as the automatic stop mechanism, refers to the measures taken by the exchange to stop trading when the stock index fluctuation reaches the specified fuse point. Specifically, it is a mechanism to set a fuse price for the contract before the contract reaches the price limit, so that the contract trading quotation can only be traded within this price range for a period of time.
On March 9, 2020, the new york stock market plunged at the opening, and then the decline reached the upper limit of 7%, triggering the fuse mechanism. After the resumption of trading, the decline once narrowed. At the close, the three major stock indexes of new york stock market all fell more than 7%. On March 12, the three major US stock indexes plunged immediately after opening. The Dow Jones index plunged more than 65,438+0,400 points, and the S&P 500 index fell more than 6%. According to market analysis, the Standard & Poor's 500 may soon fall below the 7% fuse line again, leading to the suspension of the second 15 minute fuse of the US stock market this week. On March 16, the three major American stock indexes plummeted, and the S&P 500 index fell by more than 7%, triggering the fuse mechanism and suspending trading for 15 minutes. At noon on March 18, the new york stock market crash triggered the fuse mechanism again.
"Circuit breaker" has two concepts: broad sense and narrow sense. In a broad sense, it refers to controlling the trading risk of stocks, futures or other financial derivatives and setting interval limits on their single-day price fluctuation range. Once the trading price touches the upper and lower limits of the range, the trading will be automatically interrupted for a period of time ("fuse"), or "flat" will not exceed the upper and lower limits ("fuse hold"). In a narrow sense, it refers to the "fuse" of stock index futures. It is called "fuse" because the principle of this mechanism is similar to that of circuit fuse. Once the current is abnormal, the fuse will automatically blow to avoid electrical damage. The function of "fuse mechanism" in financial transactions is also to avoid excessive price fluctuation of financial transaction products, give the market a certain cooling-off period, warn investors of risks, and win time and opportunities for relevant parties to take relevant risk control measures.