Saturday, December 5, 2015

China Adds Index-Based Circuit Breaker

China will add a stock index circuit breaker next year. The latest and apparently final version of the plan will pause stock trading for 15 minutes after a 5 percent move in the large-cap CSI 300 index. A move of 7 percent would stop trading for the day. These changes are set to take effect in January. There are already similar circuit breakers for individual stocks that move more than 10 percent in one day. These trading rules are meant to slow, but not prohibit, a stock market crash. They may also limit speculators’ ability to manipulate stock prices.

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