China announced the suspension of the new circuit breaker mechanism late Thursday night after trading in mainland stock markets was halted again on Thursday. It was the second time this week that the mechanism had led to a trading suspension for the whole day, with the new system only having been in effect since Monday.

To maintain the stable operation of the market and with the approval of the China Securities Regulatory Commission, the Shanghai and Shenzhen stock exchanges and the China Financial Futures Exchange have decided to suspend the circuit breaker mechanism, starting from Friday. 

Concerns have been voiced that the circuit breaker mechanism may have increased the volatility of share prices and some investors had called for a quick improvement in the system. The recent stock market volatility has shown that the circuit breaker mechanism is not a panacea for reining in panic selling and some detailed adjustments are undoubtedly needed.

The mechanism tracks changes in the CSI 300 Index, which measures the performance of the 300 biggest companies traded in Shanghai and Shenzhen. When the index rises or falls by 5 percent, the Shanghai and Shenzhen markets will have to close for 15 minutes. And after trading resumes, if the index moves 7 percent in any direction, trading will be suspended for the whole day.

During Thursday's morning session, the index fell to a 7 percent loss from 5 percent in about two minutes after markets reopened at 9:57 am. It reminded people of a similar scene on Monday, when the index quickly dived a further 2 percent in about six minutes before trading was halted for the rest of the day at 1:33 pm. It suggests that the 15-minute suspension may not be enough to cool down market sentiment and buy time for investors to respond amid a choppy market.

The stock markets in China are dominated by retail investors and tend to see violent fluctuations. Countries such as the US have used similar circuit breaker systems for many years but most of them adopt more relaxed trigger points. China may need to learn from their experiences to avoid frequently triggering the mechanism, so the current trigger points of 5 percent and 7 percent may have to be changed.

Moreover, major markets usually choose either a circuit breaker mechanism or daily limits on the amount by which stocks can rise or fall, but the mainland stock market has been using both systems to provide protection against volatility. However, the stock market's performance this week has shown that the double-protection system is not effective in reining in wild price swings.

Suspension of the mechanism is necessary at the moment and the securities regulator should not restart the system too hastily. Instead it should conduct rigorous research and analysis and carefully weigh the pros and cons before re-introducing the mechanism.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn