CSRC admits circuit breaker a mistake
Print Edition
The China Securities Regulatory Commission has admitted it made a mistake with the circuit breaker mechanism which turned out to be not appropriate for the country’s stock market.
“The circuit breaker is a standard practice in a lot of Western markets, so we thought that perhaps it could work in China as well,” Fang Xinghai, vice chairman of CSRC, said in an interview with CNN yesterday on the sidelines of the World Economic Forum in Davos, Switzerland.
“But of course you know, our market is dominated by small investors, (and) coupled with the risk of depreciation of the currency, there is a lot of pressure for selling.”
The CSRC introduced the circuit breaker mechanism at the beginning of the year in an effort to stem market volatility. However, the mechanism was blamed for exaggerating the fall in the market and triggering two trading halts. The mechanism was suspended by the CSRC after operating for four days.
“It was not an appropriate policy for China and the regulator admitted it,” he said.
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