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A Progressive Price Limit Mechanism To Facilitate The Market Fairness Of China’s Stock Market

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DOI: 10.38007/Proceedings.0000534

Author(s)

Qili HUANG

Corresponding Author

Qili HUANG

Abstract

With the advancement of China's Finance Sector Supply-side Structural Reform, some major institutional arrangements of China’s stock market need to be altered and amended to satisfy the reforming requirements and promote the development of the stock market, among which the current stock market's price limit mechanism that has been adopted since 23 years ago has presented several inadaptabilities such as constraining the convergence to equilibrium price, triggering volitality spillover effect and retarding market fairness. By examining the pros and cons of the current stock market price limit mechanism, this paper introduces a progressive price limit mechanism with expanding price limit band that relaxes the price limits of a stock level by level, and proves that it is a feasible measure to improve stock price depression, the imbalance of stock buyers and sellers, and the market fairness of China's stock market.

Keywords

Price Limit Mechanism; stock market; price fluctuation