What does meltdown mean?

The circuit breaker mechanism (CircuitBreaker), also called the automatic trading suspension mechanism, refers to the suspension of trading measures taken by the exchange to control risks when the stock index volatility reaches the prescribed circuit breaker point. Specifically, it is a mechanism that sets a circuit breaker price before a certain contract reaches the price limit, so that the contract's buying and selling quotations can only be traded within this price range for a period of time.

On March 9, 2020, the New York stock market opened sharply, and then the decline reached the upper limit of 7%, triggering the circuit breaker mechanism. After trading resumed, the decline narrowed. At the close, the three major stock indexes in the New York stock market all fell. More than 7%.

On March 12, the three major U.S. stock indexes plummeted immediately after opening. The Dow Jones index plunged more than 1,400 points at the opening, and the S&P 500 index fell more than 6%. Market analysts believe that the S&P 500 may soon fall below the 7% circuit breaker again, leading to the second 15-minute circuit breaker and suspension of U.S. stocks this week. On March 16, the three major U.S. stock indexes plummeted at the opening, with the S&P 500 index falling more than 7%, triggering the circuit breaker mechanism and suspending trading for 15 minutes. At noon on March 18, the New York stock market plummeted and triggered the circuit breaker mechanism again.

Extended information

The circuit breaker mechanism adopted in foreign exchanges generally has two forms, namely "melt and break" and "melt without interruption"; the former refers to when the price reaches the circuit breaker point After that, trading is suspended for a period of time. The latter means that after the price reaches the circuit breaker point, the purchase and sale orders continue to be matched within the circuit breaker price range for a period of time. The most commonly used fuse mechanism in the world is the "fuse and break" fuse mechanism.

The circuit breaker system planned to be introduced in my country's stock index futures is based on the 10% limit on the rise and fall of individual stocks in the stock market, and is established to suppress irrational and excessive fluctuations in the stock index futures market. According to the design, when the daily rise or fall of the stock index futures reaches 6%, it is the first melting point for CSI 300 Index futures trading. Within this range, "melting will continue", and it can still be traded when it reaches the "melting" point. The transaction lasts for 10 minutes, but the index quotation cannot exceed the 6% rise and fall; after 10 minutes, the fluctuation range is enlarged to 10%, which corresponds to the 10% rise and fall limit of individual stocks in the spot market. ?