On January 4, 2016 (November 25, 2015 lunar calendar), the circuit breaker mechanism: 4 circuit breakers in 4 days, stop the mechanism. Bohoboho, don't fall any more! The circuit breaker mechanism in the securities market has been around for a long time. After the 3-day holiday on New Year's Day in 2016, class A shares ushered in the first day of the New Year's opening. However, the index circuit breaker officially implemented on January 1, 2016 surprised all investors. On January 4, the CSI 300 index continued to fall after the afternoon opening, and exceeded 5% at 13:13, triggering a circuit breaker, and trading was suspended in the two markets for 15 minutes. After the resumption of trading, the CSI 300 index continued to decline and reached the 7% mark at 13:34, suspending trading until the close. January 4, 2016 class A share day chart analysis believes that the reason why the circuit breaker mechanism was broken on the first day of implementation is mainly caused by market panic. In addition, the executive reduction ban will expire, the Caixin manufacturing PMI is less than expected, the RMB on the first day of the plunge mode, the global stock market fell, and the central bank's large-value clearing system delayed closure and other five factors are also important reasons for today's circuit breaker. China Financing Fund said that the market triggered the circuit breaker mechanism on the first day of the new circuit breaker regulations on January 4, which exceeded the expectations of most investors in the market. The implementation of the circuit breaker mechanism this time will greatly increase the liquidity risk of the market, causing a disconnect between price and liquidity, and the manifestation of price and trading volume is no longer a market-oriented trading behavior, making market prices "abnormal" and prone to extreme movements. "Especially the 5% and 7% are too close, resulting in the loss of significance of the division, but the market loses liquidity between the two. "In last year's" tiger fight "action, in addition to the senior officials of the Securities Supervision Commission, there were also bosses and executives in the securities industry who were under investigation. In the context of the" tiger fight "in the financial circle, the so-called" bull market "in 2015 skyrocketed to rescue the market and short the shady situation, and then to the replacement of all the chairpeople of the four major securities companies, the securities industry can be said to have experienced a big shock. In response to today's circuit breaker, some people quipped that stocks are becoming more and more humanized now. Get a circuit breaker mechanism, give everyone fifteen minutes to drink water, write a suicide note, organize their appearance and appearance, choose a rational way of death or something, and then take it easy and die heroically. There are still many jokes triggered by circuit breakers. The panic of market sentiment shows that our country's securities market is not mature enough and there is still a long way to go. 4 circuit breakers in 4 days, class A shares are very hurt. Both markets opened low, but then it fell rapidly. The CSI 300 index fell by 5% at 9:42, triggering the first circuit breaker. However, after 15 minutes of suspension, the market did not improve. Instead, the magnetic attraction effect caused the CSI 300 index to fall rapidly to 7%. The market melted again, and class A shares actually only traded for 155 minutes. Due to the market triggering the circuit breaker and closing, the trading volume of the two markets today also appeared in volume. The Shanghai market traded only 80 billion yuan, and the Shenzhen market traded 108 billion yuan. The class A share circuit breaker created a world record and will surely be recorded in the history of class A share: the first is to surpass the United States. The US stock market implemented the circuit breaker mechanism in 1988, but it was only triggered in 1997. In addition, the US stock market has only one circuit breaker record so far. Class A share has been triggered 4 times in 4 days, and trading has been suspended twice and closed early. It has surpassed the United States in terms of the first trigger time and the number of triggers. The second point is the fast decline. Today, the market once again saw a drop of 1,000 shares, of which 1784 stocks fell by more than 9.9%; 2198 stocks fell by more than 9%. From 9:33, class A shares fell almost in a straight line, and there was no shock in the middle. After triggering the 5% circuit breaker threshold and resuming trading, the speed of decline further accelerated. According to the announcement of the Shanghai and Shenzhen stock exchanges in the morning, the actual trading time was only 15 minutes. Even when the market adjusted in 2015, its single-day decline speed was also difficult to compare with today. The third point is that the selling pressure is large and the circuit breaker is fast. In the circuit breaker era, the biggest difference from the previous market adjustment is that trading is suspended after reaching the circuit breaker threshold. For the follow-up funds, whether it is self-rescue or bottom fishing is of no avail. In fact, from the trend of many weights of CSI 300, it can be seen that today China Ping An, Construction Bank, Shanghai Pudong Development Bank and other stocks are trying to pull up funds. For example, China Ping An, its share price rose rapidly at 9:58, but the selling pressure was too large, the share price fell rapidly, and then CSI 300 triggered the 7% threshold and suspended trading. The fourth point is to close early. The 3-point close that has been unmovable for more than 20 years quickly subverted after entering 2016. It was closed twice in advance within 4 days. Today, it was closed half an hour after opening, which also created a historical record for class A shares. What is circuit breaker mechanism circuit breaker mechanism (Circuit Breaker), also known as automatic suspension mechanism, refers to when the volatility of the stock index reaches the specified circuit breaker point, the exchange takes measures to suspend trading to control risks. Circuit breaker system has two forms of "melt and break" and "melt and break". On December 4, 2015, the Shanghai Stock Exchange, Shenzhen Stock Exchange, and China International Capital Exchange officially issued the relevant regulations on index circuit breaker. The benchmark index of circuit breaker is the CSI 300 Index, with two thresholds of 5% and 7%. It was officially implemented on January 1, 2016. The suspension of circuit breaker system lasted for 4 trading days. Deng Ge, a spokesperson for the Securities Supervision Commission, answered a reporter's question late at night: Decided to suspend the circuit breaker mechanism! Q: The three exchanges have issued a notice to suspend the implementation of index circuit breakers since January 8, 2016. How does the Securities Supervision Commission comment on this? Deng Ge, a spokesperson for the Securities Supervision Commission: The main purpose of introducing the index circuit breaker mechanism is to provide a "cooling-off period" for the market, avoid or reduce hasty decision-making in the event of large fluctuations, protect the legitimate rights and interests of investors, especially small and medium-sized investors; curb the rise and fall effects of programmed trading; and provide emergency response time for dealing with technical or operational risks. The circuit breaker mechanism is not the main cause of the market crash, but from the recent two actual circuit breakers, it did not achieve the expected effect, and the circuit breaker mechanism has a certain "magnetic attraction effect", that is, when the circuit breaker threshold is approaching, some investors trade in advance, causing the stock index to accelerate to touch the circuit breaker threshold, which played a role in helping the decline. Weighing the pros and cons, the negative impact is currently greater than the positive effect. Therefore, in order to maintain market stability, the Securities Supervision Commission decided to suspend the circuit breaker mechanism. The introduction of the circuit breaker mechanism was initiated after the abnormal fluctuations in the stock market in 2015, at the appeal of all relevant parties. The relevant plan has been carefully demonstrated and publicly solicited opinions from the public. The circuit breaker mechanism is a brand-new system. There is no experience in our country. Market adaptation also requires a process, which requires gradual exploration, accumulation of experience, and dynamic adjustment. In the next step, the Securities Supervision Commission will carefully summarize experience and lessons, further organize relevant parties to study and improve the plan, widely solicit opinions from all parties, and continuously improve the relevant mechanism. Extended reading: There is only one circuit breaker in the US stock market? In fact, there are 77 pre-market circuit breakers. Extended reading: There is only one circuit breaker in the US stock market? In fact, there are 77 pre-market circuit breakers. On January 4, 2016, the first day in the history of class A shares, the circuit breaker mechanism was triggered and closed in advance. Media reports said that the United States has only triggered a circuit breaker mechanism in 1997 since the introduction of the circuit breaker mechanism in 1988. But people are also ignoring another set of premarket circuit breakers in the United States, known as "Rule 48" (Rule48), which has been used 77 times since 2008. How does the American circuit breaker mechanism work? Circuit breakers in the US consist of two parts. One is the circuit breaker mechanism for the broader market, such as the Dow Jones Industries Average Index falling by 10% and suspending trading for one hour, and the next circuit breakers after resuming trading are 20% and 30% respectively. The other part is the circuit breaker mechanism for individual stocks approved by the Securities and Exchange Commission (SEC) in 2010. When a particular stock falls by 10% or more in 5 minutes, trading is suspended for 5 minutes. It applies to the constituents of the S & P 500 Index, the Russell 1000 Index and hundreds of ETFs. The impetus for the introduction of the circuit breaker mechanism in the United States was "Black Monday" in 1987. On October 19, 1987, the Dow fell 508.32 points or 22.6%. Three months later, the circuit breaker mechanism was introduced in February 1988. Until 1997, the circuit breaker mechanism in the United States was triggered based on the number of points the market fell rather than the percentage, resulting in a circuit breaker on October 27, 1997, although the decline was only 7% at that time. The trigger basis was later changed to a percentage decline, then changed back to the basis point, and then changed to a percentage basis. Later, the S & P 500 replaced the Dow as the benchmark index for triggering circuit breakers. The current circuit breaker in the US market is divided into three levels. The first level is after the S & P 500 index falls by 7%, and the second level is after the 13% decline. If it occurs between 9:30 am and 3:25 pm EST, trading will be suspended for 15 minutes. The third level circuit breaker is after a 20% decline, and the day will close early. What is "Rule 48"? Unlike the circuit breaker mechanism that stops the stock market from trading, "Rule 48" accelerates the opening of the market by suspending opening quotes in the event of a sharp decline in the futures index. To trigger "Rule 48", exchanges must determine that specific circumstances are causing market distortions, including the volatility of the previous day, pre-market trading in overseas markets, and intense movement of pre-market futures indexes. The most impressive "Rule 48" event to trigger everyone was before the market on August 24. Affected by the slump in the Chinese stock market, trading in the three major futures indexes of US stocks was collectively suspended. "Rule 48" was approved by the US Securities and Exchange Commission in December 2007. It was triggered three times in the week when US stocks fell sharply at the end of August 2015 alone. It was also triggered during the financial crisis in January 2008, the European debt crisis in May 2010, the US government shutdown in August-September 2011, and the extreme cold weather in January 2015. According to CNBC statistics, "Rule 48" has been invoked 77 times since 2008.