Chinese authorities announced today the suspension tomorrow automatic switching mechanism of the bags during heavy movements, the official Xinhua news agency reported.
The decision comes after the new mechanism, which became operational this week, it has already caused the early closure of markets twice on Monday and today, and the turmoil have affected the stock markets around the world.
"Currently the negative effects of the mechanism outweigh the positive effects. Therefore Regulatory Commission Securities Market of China decided to suspend the switch mechanism to maintain market stability, "said a spokesman for the agency, Deng Ken, in a statement.
The mechanism took effect with the new year and was operational as of Monday, the first session of this year, in a series of measures implemented by the authorities in Beijing to avoid loud crashes last summer that shocked Chinese stocks and infected to world markets.
It is a system which provides that when the CSI 300 set (which groups 300 securities listed on China's two stock exchanges, Shanghai and Shenzhen), down or up 5% rate auto stop 15 minutes occurs.
If after resuming the strong movements continue and a variation of 7% is reached, the meeting was suspended until the next day.
The suspension follows a switch mechanism as previously announced by the Regulatory Commission China Securities Market (CRMV) to try to stabilize the markets and that is to limit the ability to sell securities of the great Chinese shareholders to a maximum of 1 % of total shares of a company.
Thus, these large shareholders (holders of 5% or more of the securities of a company) can not part with more than 1% of the total within three months and also be required to announce their plans to market to do at least 15 days in advance. EFE
RCF / psh