The Introduction Of Fusing Mechanism Will Change The "Play" Of The A Share Market.

With the formal introduction of the Chinese style fusing mechanism, the A share market will be changed to a certain extent.

Therefore, the author believes that before the landing of the fusing mechanism, regulators must really consider carefully, and further speed up the institutional reform of the A share market, and improve the way of hedging risks of individual investors, so as to cope with the potential risks under the fusing mechanism.

Before the collapse of the fusing mechanism, the regulatory authorities need to consider carefully and further speed up the institutional reform of the A share market and improve the way of hedging risks of individual investors, so as to cope with the potential risks under the fusing mechanism.

In recent months, there has been a series of irrational falls in the A share market.

In view of the downward pressure on the stock market and to reduce the risk of systemic risk in the domestic financial market, management has also made a number of measures to stabilize the stock market and slow down the risk of market volatility.

Among them, the introduction of a series of new rules and the release of fusing mechanism.

Take the fusing mechanism as an example, with the increasing risk of stock market volatility, the speed of the supervision of this policy has also exceeded the market expectation.

On the evening of September 6th, the SFC issued a late night note that it would study and formulate the implementation of the index "fusing mechanism" program.

However, just the next day, the Shanghai Stock Exchange, Shenzhen bank and CICC jointly issued the notice on public consultation on the related provisions of index melting, and the deadline for public consultation is September 21st, that is, next Monday.

This shows that with the advent of the deadline for public comment, or in the near future, A shares will usher in a Chinese style fusing mechanism.

According to the relevant rules, in actual operation, the time will be taken to determine the time of exponential melting in the future.

In short, when the market triggers a threshold of 5%, the market will suspend trading for 30 minutes, and if the market triggers 5% of fusing threshold and triggers 7% of the fuse threshold at any time during the trading hours of 14:30 and later, the market will be suspended until the end of the day.

In this regard, with the rule of Chinese style fusing mechanism spread, it has aroused widespread heated debate in the market.

The author believes that the introduction of the Chinese style fusing mechanism will change the A share market to a certain extent.

Looking at the practices of mature markets abroad, we mainly divide the "fuse" into two forms: "melting" and "melting".

However, in practice, we take the US stock market, which is our high concern, as an example.

Review the performance of foreign mature markets over the years, in which

Behind the smooth performance is also closely related to the mature market mechanism.

Among them, throughout the previous crash, the fusing mechanism has basically played a good protective role in the local market.

However, the Chinese style fusing mechanism needs to be reinterpreted.

The main reasons are the following factors.

First, China

The unique trading system may reduce the function of the fusing mechanism.

In fact, for most foreign markets with fusing mechanism, the trading system is relatively flexible, and there are no such problems as the rise and fall restrictions.

However, in China's A share market, there is not only a rise and fall restriction, but also a "T+1" trading system.

As a result, the function of fusing mechanism will be greatly reduced.

On the basis of the original limit of increase and fall, reusing the system of fusing and so on is also a superfluous effect. Its "fusing" effect is not significant.

At the same time, under the mode of fusing mechanism, the liquidity problem of A share market in the future will also be highly concerned by the market.

Secondly, in the process of irrational fall, Chinese style

Or it will make the market unable to fully release the risk of falling.

The purpose of the Chinese style fusing mechanism is to curb excessive speculation in the market and try to slow down the risk of market volatility.

However, in accordance with the relevant rules, that is, when the market has an irrational downward trend, it may trigger the market to suspend trading.

As a result, in the process of accelerating the release of market risk, the potential short selling kinetic energy can not be fully released, and it will also increase the risk of sell-off in the next trading day to a certain extent and extend the market adjustment time.

Third, because of the limitation of trading system, it is necessary to increase the risk of shareholding for ordinary retail investors.

In the current paction, A shares adopt the "T+1" trading system, while for the stock index futures market, the "T+0" trading system is adopted.

As a result, the phenomenon of asymmetric market trading system is also formed.

However, under the fusing mechanism, when the market is in an irrational downward trend, retail investors are often unable to escape quickly, thus increasing their shareholding risk.

Obviously, under the environment of limited market trading system, ordinary retail investors also lack the right to correct mistakes.

Under the fusing mode, the difficulty of retail investors will be bigger and bigger.