Stabilization Fund, also known as Intervention Fund, is a fund established by the government in a statutory manner through specific agencies (CSRC, Ministry of Finance, exchanges, etc.).

It performs reverse operations on the securities market and smooths out irrational violent fluctuations.

The main purpose is to prevent the stock market from skyrocketing and plummeting, in order to achieve the purpose of stabilizing the securities market.

Under normal circumstances, the source of stabilization funds has legal channels or its basic composition is mandatory, such as national financial allocations, levies from relevant units participating in the securities market, etc., and allotment to investors who voluntarily purchase is not excluded.

Broadly speaking, stabilization funds usually refer to funds established by the government in a statutory manner through specific institutions. Through reverse operations on a specific market, they reduce irrational market fluctuations in order to achieve the purpose of stabilizing the market.

The word "leveling" means "equal loss leveling", which is a goods transportation and marketing policy adopted by the ancient Chinese government to adjust market prices and obtain fiscal revenue.

In the second year of Yuan Ding (115 BC), Emperor Wu of the Han Dynasty, Sang Hongyang tried to establish Junshu, and set up Junshu officials and Pingzhun officials under Da Sinong.

That is to say, buy it, and sell it if it is expensive. Therefore, the county magistrate does not misrepresent the truth, and the merchants have no profit from trade, so it is called Pingzheng."

Because this method is indeed feasible, later generations often imitate it, such as Wang Mang's practice of "Wu Jun and Liu Wan"; Liu Mian of the Tang Dynasty managed the wealth of the southeast and used taxes to purchase goods to supply Guanzhong; Wang Anshi of the Song Dynasty practiced the method of transporting goods and changing markets; etc.

In the famous "Wealth of Nations" in the West, there is also the theory of "equilibrium theory".

Classification of stabilization funds According to the market in which stabilization funds function, there are currently several categories: foreign exchange stabilization funds, government bond stabilization funds, grain stabilization funds, and stock market stabilization funds.

Sources of Stabilization Funds Stabilization funds can come from a variety of channels, mainly statutory channels. Most of their basic components are mandatory, such as national fiscal appropriations, levies from relevant units participating in the securities market, etc., and they are not

Excludes placements to voluntary investors.

Characteristics of stabilization funds According to the above definition, stabilization funds have the following characteristics: 1. Stabilization funds are a policy fund whose fundamental responsibility is to achieve stability in the securities market and prevent sudden rises and falls.

To this end, the entire process of its establishment, operation, evaluation, and management is affected by policies or directly accepts government instructions to serve the securities regulatory authorities and become one of the effective means of direct supervision of the securities market.

2. The stabilization fund is a non-profit fund, which distinguishes it from other securities investment funds, because the purpose of other securities investment funds is to obtain maximum fund value-added for investors.

The stabilization fund should have a large enough plate.

If the number of funds is not large enough, it will have little stabilizing effect on the securities market and cannot play the role of "anchoring the sea".

3. The source of the stabilization fund has legal channels or its basic composition is mandatory, such as state financial allocations, levies from relevant units participating in the securities market, etc., and voluntary investor placements are not excluded.

4. There are special regulations and procedures for the operation and management of stabilization funds to ensure the principles of "three public affairs" and not harm the interests of the vast majority of investors.

Functions of Stabilization Funds The basic function of stabilization funds is to stabilize irrational fluctuations in the stock market.

On the one hand, this refers to the irrational fluctuations of the market (index), on the other hand, it should also include the sudden rise and fall of individual stocks.

According to the theory of the U.S. stock market, a continuous drop of 20% from a high point can be called a bear market, and a single-day drop of more than 5% can be called a stock market disaster.

For example, after the Shanghai Composite Index reached a high of 1,756 points in the "5.19" market in 1999, it fell to 1,350 points, a drop of nearly 25%, which was obviously inconsistent with the development background of my country's macroeconomics and was therefore irrational; in October 1999 On the 28th, on the first day of listing of the "Fund Hunan Securities", the opening price was 2.45 yuan, the highest price reached a fund transaction record of 10 yuan, and the closing price of 6.2 yuan was much higher than its net asset value per fund unit of 1.137 yuan, forcing the management to adopt early measures. The method of enlarging the fund-raising (it was announced on November 3 that the fund-raising will be expanded at a ratio of 1:1.65) to combat speculators has dragged down many investors and caused adverse effects.

In similar situations, intervention is required.

In addition to the "levelling" function, the author believes that the leveling fund insurance function can be given to the leveling fund insurance function by referring to the role played by SIPC in the United States, that is, to provide risk compensation or guarantees for investors (including securities firms, institutions and general investors).

For example, when a securities firm is in financial crisis, the stabilization fund can intervene within the securities firm according to certain procedures, provide management advice, provide financial support, or even help it liquidate and pay certain liquidation insurance premiums.