There are two types of fuses. The first one is that when the price touches the fuse point, it will stop trading and fuse for a subsequent period of time. The second is that trading can continue after the price touches the fuse point, but the quotation is limited to the fuse point, that is, melting continues.
The A-share fuse mechanism was formally implemented on 20 16 1, depending on the Shanghai and Shenzhen 300 Index. When the Shanghai and Shenzhen 300 Index hit the 5% line and began to fuse, the Shanghai and Shenzhen stock markets and stock index futures were suspended for 15 minutes. When the Shanghai and Shenzhen 300 Index hit the 7% line, it started the second fuse and closed directly. When the CSI 300 is blown after 14:45, it will be closed directly.
The first is the role of early warning. When the fuse mechanism is triggered, it actually sends a strong signal to the market, indicating that the market is experiencing an extreme unilateral market, making them realize what the future transaction will look like and take corresponding preventive measures. The second is to win time. Since the trading will be suspended for a period of time when the market fluctuation reaches the fuse point, it is enough for traders to consider the risk management method and reach a trading order reflecting their willingness to operate at the exchange for the computer host to match the trading after resuming trading.
At the same time, eliminate the decline in liquidity. Due to the blocking of a large number of buying or selling orders, the normal display of the market will be delayed, resulting in outdated prices. The price people see at this time is actually the last-minute price, and we must not make a deal at this price. With the fuse period, the instruction blocking phenomenon of the trading system can be eliminated, the outdated price can be eliminated, and the smooth transaction can be ensured.