The Foresight And Feasibility Of The A Share Index Fusing Mechanism

After the turmoil in the stock market in 2015, regulators were able to get a long cut in wisdom. The fusing mechanism could also play a stabilizing role in the market. Before and after melting, investors' Education in the order and withdrawal of the shareholders and the redemption of the foundation people will follow.

But we know that this is not fundamental.

Just like the prevention of disease, it must be based on a strong body, otherwise the preventive measures will be more thoughtful and unavoidable.

Since the latest rules (the 2012 Edition) have not been put into use, the fusing mechanism of the US stock market after the stock market crash has not yet come into operation.

This is exactly the one for China.

People who want to keep their futures will need to spend 1.5 hours in the first trading day after 2016 and think hard for a long time in the future.

According to the relevant rules, the fuse index is the Shanghai and Shenzhen 300 index.

The threshold is divided into 5% and 7% two stalls. After the first trading day, A shares appeared on a big drop. While examining 5% and 7% two passes, Shanghai stock index fell 6.85%, Shenzhen Composite Index and gem fell 8.2%.

Whether the next trading day will trigger the fusing mechanism again has become the focus of public attention.

There are many reasons for triggering the decline of the stock market. For example, the shareholders holding more than 5% of the listed companies began to regain the freedom of reduction in January 8th, the pressure of the funds at the beginning of the year and the pressure on the accounts to return to the table, as well as the rank examination at the end of the year.

However, the fusing mechanism was verified on the day of its formal publication. This black humor obviously prompted everyone to focus more attention on the mechanism itself.

Objectively speaking,

There is no problem in itself. At about 1:30 in the afternoon, to about 1.5 hours in the market, no matter whether it is noisy or silent, it is also 1.5 hours that some market participants really used to think about the market and their investment behavior.

If the fusing mechanism does not exist, and when the Shanghai and Shenzhen 300 decline has reached 7%, and other stocks are also hard to be independent, it is inevitable to reproduce the contagion panic in the stock market crash. It will also easily lead to collective irrational behavior and pmit to the derivatives market such as futures.

After the fusing, some of the stocks have a distance of about 3% or even smaller from the limit, but it is 1.5 hours to really lie on the limit board.

Even if the downtrend continues, the breather time on the battlefield can be said to be not valuable. It is probably only a matter of interest to let it go down, or to go back to solving the problem.

Of course, the role of fusing mechanism is not without cost, and it will also have a certain impact on market volatility.

When the market falls close to the threshold, it may lead investors to panic and sell off in fear of fusing, thus leading to the fusing threshold.

However, it should be noted that this is essentially different from the 1000 stock limit caused by the deleveraging process and the trample of the priority capital stop.

Moreover, at present, the threshold level of the first level is relatively low (according to historical data, there is a trading day fluctuation of more than 5% on almost every 25 trading days), and the gap between the two threshold and the first level threshold is too small, only 2 percentage points, and the normal paction may be interrupted more frequently.

In addition, A shares in the case of existing stock price limits, the index fusing threshold is relatively harsh? Touch frequency estimation will be much higher than the mature market such as the US stock market.

However, any system is a double-edged sword. The key lies in the pparency and fairness of rules, and the equal position of institutions and retail investors.