"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 index futures.

"Fuse" 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.

There are generally two forms of fuse mechanism adopted in foreign exchanges, namely, "melting off" and "melting non-stop"; The former means that when the price touches the fuse point, the transaction will be suspended for a period of time, and the latter means that after the price touches the fuse point, the transaction declaration will continue to match the transaction within the fuse price range for a period of time. The fuse mechanism of "fuse and break" is widely used in the world.

China's stock index futures will soon introduce a fuse system, which is based on the 10% price limit of individual stocks in the stock spot market, in order to curb irrational excessive fluctuations in the stock index futures market. According to the design, when the daily price of stock index futures reaches 6%, it is the Shanghai and Shenzhen 300 Index.

The first melting point of futures trading, within this range, it can still be traded for 10 minutes after reaching the "melting point", but the index quotation shall not exceed 6%; After 10 minutes, the fluctuation range is enlarged to 10%, corresponding to the daily limit of individual stocks in the spot market 10%.