Today, LTG Goldrock will share with you the meaning and background of the melting mechanism ~
The meaning of the fusion mechanism
"Circuit Breaker" has two concepts: broad and narrow sense .The general sense refers to the transaction risk of controlling stocks , futures or other financial derivative products. It is limited to the specified range of the range fluctuation among a single -day price."), Or" lying down "without exceeding the upper or lower limit (" melting and constantly ").The narrow sense refers to the "melting" of index futures.The reason why it is called "melting" is that the principle of this mechanism is similar to the circuit fuse. Once the current is abnormal, the fuse will automatically melt to prevent the electrical from being damaged.The "fuse mechanism" in financial transactions also has its role to avoid excessive price fluctuations in financial trading products, give the market for a certain period of time, warn investors risks, and take relevant risk control methods and measures to win time to win timeOpportunity.
The background of the introduction of the fuse mechanism
The fuse mechanism originated in the United States earlier. The Chicago Business Exchange in the United States implemented a 3%price limit on the daily transaction price on the S & P 500 Index Futures Contract in 1982.However, this provision was abolished in 1983. It was not until 1987 that the stock disaster occurred, and people re -considered the implementation price restriction system.
On October 19, 1987, the stock market in New York broke out in history. The Dow Jones Industrial Index fell 508.32 points within a day, down 22.6%.In terms of restrictions, many millionaires have become poor overnight, and this day is also called "Black Monday " by the US financial community.
On October 19, 1988, the US Commodity Futures Commission and the Securities Exchange Commission approved the fusion mechanism of the New York Stock Exchange and the Chicago Commercial Exchange.According to relevant US regulations, when the S & P index fell 7%in a short period of time, all US securities market transactions will be suspended for 15 minutes.
In June 2015, a "stock disaster" in the Chinese stock market had a "stock disaster". The stock market fell from 5178 to 2850 points in two months, a decline of nearly 45%.In order to curb the effects of the flock effects that investors may produce, inhibit the chase and fall, and reduce the fluctuations of the stock market, it will allow investors to have sufficient time to spread information and feedback information, so that the asymmetry and price of informationThere is a reduction, thereby preventing violent volatility of prices.The China Securities Regulatory Commission began to introduce the melting mechanism.
