Beijing:(IANS) Mechanisms such as a circuit breaker are needed to deepen reforms, improve the legal framework and enhance market supervision to prevent further abnormal fluctuations, China’s securities’ regulator has said.
A stock market rout since mid-June, which had chopped the benchmark Shanghai Composite Index by more than 38 percent by Wednesday, exposed many problems, including insufficient regulation and supervision as well as excessive short-term speculations, the China Securities Regulatory Commission (CSRC) said in response to queries from Xinhua news agency.
The CSRC said it will study introduction of a stock index circuit breaker system, a point at which trading will be suspended for a period of time in response to substantial drops.
China should make sure that the stock market serves the real economy, promotes the development of institutional investors and implements policies to encourage long-term investment, the CSRC said.
China should learn from developed economies on how to improve the top-level design for the market, the CSRC said.