What is a fuse system? The so-called "fuse" system means that when the volatility interval touches the specified number of points, the transaction will stop for a period of time, or the transaction can continue, but the price interval cannot exceed the specified number of points. Because this situation is similar to the protection of electrical appliances, because the fuse will blow when excessive current passes through, it is vividly called "fuse" system.

How did the fuse system come into being?

198710 June19, the Wall Street stock market crashed. After the opening, the Dow Jones index opened 67 points lower with a gap, and fell less than 1 hour 104 points. Due to a large number of sales, the computer shows that it is 20 minutes later than the actual transaction. It fell 250 points at 2 pm and closed two hours later, down 508 points, or 22.6%, with a market value loss of $503 billion. This triggered a global stock market crash, and the US, Europe and Asia stock markets fell. The frenzy of centralized selling directly caused the paralysis of the computer trading system. On that day, the NYSE trading system had a backlog of 45 minutes of unprocessed entrustment. Trading is blocked, the liquidity of the stock market is greatly reduced, and the depressed market can no longer reflect the real market fluctuation of the stock market. While the stock market is seriously blocked, the trading of stock index futures is running normally. The collapse of the stock spot market led to the oversold of stock index futures, and this obvious price difference triggered the second selling frenzy of the stock market.

What is the function of fuze system?

The "fuse" mechanism has played a positive role in the risk control of stock index futures and even the whole futures market. First of all, for investors, the fuse period provides a cooling-off period for the market, and investors can fully understand and digest the information that affects the market price and reduce irrational trading behavior; Secondly, for the exchange, the introduction of the fuse mechanism is conducive to gradually resolving trading risks in stages, rather than being caught off guard in one step.

In foreign exchanges, there are two forms of "fuse" system, namely "fuse" and "fuse". The meaning of "melting off" is to stop trading for a period of time after the price touches the "melting point"; "Continuous fuse" means that after the price touches the "melting point", trading can continue for a period of time, but the quotation is limited to the "melting point".