The Fusing Mechanism Provides A Cooling Off Period For The Market.

The fusing mechanism mainly provides a "cooling off period" for irrational markets, and will not change the direction of the stock market in essence. When the market has experienced this "cooling off period", it will return the initiative to the market to meet the needs of market self-regulation.

"Cheng Yi capital, losing funds" is a true portrayal of China's stock market. However, for this bull market, it may be more appropriate to describe it as "leveraging and losing leverage".

Indeed, over the past year or so, leverage has had a significant impact on the market's leveraging. Among them, during the period from July 2014 to June 2015, the scale of stock market financing rose sharply from 450 billion to 2 trillion and 270 billion. At the same time, with the rapid development of on-site financing, the impact of A share on the leveraging of the market is more significant. During the period from 3 to June this year, it was the key point of the A share market's over-the-counter business, and at the peak of the market, the over-the-counter business was over 2 trillion.

However, for leveraged funds, it has both advantages and disadvantages. During the period from June 2015 to July, the stock market continued to deduce irrational downward trend, which is the true embodiment of leverage capital to help fall. At the same time, combined with the vigorous "deleveraging" process, its impact on the market is also quite profound.

It should be noted that in essence, the fusing mechanism mainly provides a "cooling off period" for irrational markets, but it will not change the direction of the stock market in essence. When the market has experienced this "cooling off period", it will return the initiative to the market to meet the needs of market self-regulation.

Perhaps, after the A share fusing mechanism is launched, it will bring more stability expectations to the market. At the same time, on the basis of existing price limits, the fusing mechanism is implemented again. In fact, it is a form of "double insurance", which conveys more stability signals to the market.

As the management said, the stock market ups and downs have their own operation rules. Generally, the management does not interfere. But when the stock market fluctuates violently and may cause systemic risk, management will take decisive measures to stabilize the stock market in time.

In accordance with the operation process, from January 1, 2016, China will implement the Chinese version of the fusing mechanism, that is, the A share fusing mode. At this point, with the formal launch of the A share fusing mechanism, it will profoundly affect the A share market. Operation pattern 。

For the upcoming A share futile mechanism, there are many notable characteristics. Specifically, it highlights the highlights of these aspects.

First, when the fuse threshold of 5% is triggered, the market will suspend trading time to 15 minutes.

Second: the same extent. Fuse Trigger only once, while the trigger time is triggered by 5% or 7% in any time period of the day.

Third: take the rule of two-way fusion, and will form a "three cities combined fuses, two-way fuse and split fuse" mode.

Fourth, stock index futures trading time is synchronized with A shares.

Fifthly, fuses continued until 15:00, and no bulk trading could be made on that day.

Its six: retain the price limit system and the existing "T+1" trading mechanism.

In view of this, the upcoming A shares fusing mechanism takes into account the operation characteristics of the A share market and can draw lessons from the fusing mode of the mature market abroad. Perhaps, when the A share fusion mechanism is launched, it will bring more beneficial effects to the market.

The author thinks that A shares The fusing mechanism will have a positive impact on the market. However, for the irrational market, although there is the existence of fusing mechanism, it will only provide a "cooling off period" for the market, but does not fundamentally change the market trend. As a result, if the market pressure is too heavy, the fusing mechanism has played a role in delaying the decline or postponing the centralized capital sell-off, and has not completely released the strong downward kinetic energy of the market. In this regard, if the market does not improve the risk hedging function of ordinary investors, the risk of shareholding of ordinary investors still exists.

Therefore, when the A shares fuse mechanism is launched, there may be more perfect supporting measures to be introduced, such as increasing the risk hedging function of ordinary investors, so as to protect the vital interests of ordinary investors in essence.