All market participants will be required from Friday to take part in the trial operation of the circuit breaker mechanism for the country's stock market, the Shanghai Stock Exchange (SSE) said in a prepared statement on Monday.
With the approval of the China Securities Regulatory Commission, the SSE, the Shenzhen Stock Exchange (SZSE) and the China Financial Futures Exchange issued regulations on the circuit breaker mechanism on December 4, 2015.
The mechanism aims to "prevent the risk of dramatic market fluctuations, further improve the securities trading system, maintain market order, protect investors' rights and interests, and propel long-term and sound growth of the securities market," the SSE statement said on December 4.
The circuit breaker mechanism refers to exchange rules that halt trading if major indexes fluctuate by a specified amount during trading hours.
For instance, when the market makes a big upward move, the circuit breaker mechanism can stabilize investors' sentiment, prevent investors from overreacting to market fluctuations and give investors more time to think cautiously, the SZSE said in a statement on December 14.
