(China Alert) CSRC to impose new A-share circuit breaker
- cross border, CSRC, QFII, RQFII
·CSRC issued a draft proposing daily suspension limits for CSI 300
·30 min suspension for a 5% up or down move, full-day closure for 7%
·This would have far-reaching impacts on the cross-border landscape
Update: CSRC issued draft regulations last night stipulating new daily suspension and closure limits for the A-share market. If the CSI 300 climbs or falls by 5%, trading will be suspended for 30 min; if the index reaches a 7% up or down limit, the market will close for the day. We believe current market conditions could test these limits (if implemented) and will have far-reaching consequences for the cross-border landscape, specifically participants in the QFII, RQFII and Connect schemes. CSRC issued the draft as a signal of its intentions to move away from direct market involvement and towards structural re-adjustments. It would appear to us this is long-term thinking; the effect it will have in the short term may be another matter entirely.
Public consultation on CSRC’s initial draft will conclude on September 21. Historically, the CSI 300 has reached the proposed 7% up and down limits around ……
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