China To Install 'circuit Breaker' To Prevent Stock Selloffs

By MarketWatch Pulse

China on Tuesday revealed plans to introduce a "circuit breaker" mechanism for its stock exchanges, aimed at preventing panic selloffs during heightened volatility. The Shanghai and Shenzhen stock exchanges' circuit-breaker system will be tied to the CSI 300 Index, which tracks stocks on both markets. Trading on those bourses will be suspended when the index swings up or down 5%, while a rise or fall of 7% will lead to suspension of trading for the day, the China Financial Futures Exchange said in a statement posted online and jointly issued with the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

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