The fuse of the stock market, that is, the suspension of trading under certain market conditions, is a measure to deal with the violent fluctuation of the market. This mechanism aims to prevent the vicious circle of the market and prevent investors from selling stocks on a large scale, which will lead to the collapse of the financial system.
The fuse mechanism of China stock market was launched in June, 20 16, which initially attracted wide attention in the global market. This mechanism is mainly based on the fluctuation of stock index futures prices to protect the market from excessive panic. Once the price fluctuation of stock index futures reaches a certain range, trading will be suspended within 15 minutes. If the price of stock index futures fluctuates again within 30 minutes after the suspension, trading will stop all day.
The introduction of fuse mechanism in China stock market aims at solving the problem of excessive fluctuation in the stock market and improving the stability and risk resistance of the market. At the initial stage of implementation, this mechanism caused a series of controversies. Some critics believe that the fuse mechanism may aggravate market panic and lead investors to sell stocks more crazily. Others believe that the fuse mechanism can effectively curb excessive market volatility and protect the interests of investors.
In addition to China, some other countries around the world have also introduced the stock market fuse mechanism. For example, the US stock fuse mechanism introduced by 1987. After the stock market crash known as "Black Monday", in order to prevent similar incidents from happening again. The fuse mechanism in the United States is divided into three stages. Trading will be suspended when the Dow Jones Industrial Average falls by different percentages. The first stage is when the decline reaches 7%, the transaction stops 15 minutes. The second stage is when the decline reaches 13%, the transaction stops 15 minutes. The third stage is to stop trading all day when the decline reaches 20%.
Similar to China and the United States, other countries have introduced the stock market fuse mechanism, such as South Korea, Brazil and India. These countries have different fuse mechanisms, but they all aim at protecting the interests of investors and maintaining the stability of financial markets.
The introduction of the stock market fuse mechanism has undoubtedly improved the stability and risk resistance of the financial market. It provides a relatively safe trading environment for investors and reduces the possible losses caused by the vicious circle of the market. At the same time, the fuse mechanism also urges investors to treat market fluctuations more rationally and reduce excessive speculation and panic behavior.
The stock market fuse mechanism also faces some challenges and controversies. On the one hand, the fuse mechanism may trigger market panic, leading investors to sell stocks more crazily, further aggravating market volatility. On the other hand, the stock market fuse mechanism cannot solve the fundamental problems of the market. This is only an emergency measure, and it can't cure the market risk.
The fuse mechanism of global transnational stock markets has played an important role in maintaining the stability of financial markets and protecting the interests of investors. Although the stock market fuse mechanism faces some disputes and challenges, it is undoubtedly the guardian of the financial market, providing investors with a relatively safe trading environment and reducing market uncertainty and risks. In the future, with the continuous development and innovation of the financial market, the stock market fuse mechanism needs to be constantly improved and adjusted to meet the needs and characteristics of different markets.