China will suspend automated stock trading halts

AP News
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Posted: Jan 07, 2016 11:30 AM

China's market regulators say they are suspending a mechanism that automatically halts trading when stocks fall sharply.

The mechanism, which was implemented at the beginning of the year, has been triggered twice this week. On Thursday trading was stopped after just 30 minutes.

The China Securities Regulatory Commission announced the decision.

China's market has fluctuated wildly in the past year, despite government efforts to stabilize it. Economists say the current "circuit breakers" may be adding to volatility because they have too low a threshold.

The halts would have been tripped 20 times the final quarter of 2015, according to IHS Global Insight.

The circuit breakers pause trading for 15 minutes if a key index falls 5 percent and stop it for the day with a decline of 7 percent.