[BEIJING] The suspended stock market circuit breaker mechanism was not an appropriate policy for China, the deputy head of the country's securities regulator told CNN, two weeks after the mechanism was halted. "The circuit breaker is a standard practice in a lot of Western markets, so we thought that perhaps it could work in China as well," Fang Xinghai, the vice chairman of China's Securities Regulatory Commission (CRSC) said in an interview with CNN on the sidelines of the World Economic Forum in Davos. "But of course you know, in our market, dominated by small investors, coupled with the risk of the depreciation of the currency and downward pressure of a lot of emerging markets, there is a lot of pressure for selling." On Jan 8, Beijing ditched the circuit breaker - which halts trading when the market plunges by a certain level - only three days after it came into effect.
The introduction of the circuit breaker had "stopped liquidity" Fang said in the interview, which was posted on CNN's website late on Wednesday. "It was not an appropriate policy for China and the regulator admitted it," he told CNN. "We should give regulators credit for admitting the mistake."