How useful are circuit breakers?
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BECAUSE of the massive volatility in global equity markets over the past fortnight, an interesting piece of news may have passed relatively unnoticed - the apology by China's market regulator for its "shortcomings" in the way it handled steep plunges in its stock market.
"The abnormal fluctuations on the stock exchanges have revealed the immaturity of the Chinese markets...they also exposed shortcomings in the supervision, as well as regulatory mechanisms that are inappropriate and ineffective," said Xiao Gang, head of the China Securities Regulatory Commission, a little more than a week ago.
Although not explicitly stated, among the regulatory mechanisms referred to must have been the China market's circuit breakers which had been installed only a fortnight earlier - only to be hastily removed after just four trading days.
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