The stock market circuit breaker mechanism is dead, the new chairman of the China Securities Regulatory Commission (CSRC) told reporters in Beijing on Saturday.
Xiao Gang, Liu’s predecessor, had introduced the circuit breaker mechanism in January as a way to add more stability and remove volatility in response to the rout last summer that saw stocks plunge 40%.
However, the cure proved to be worse than the disease. The Chinese stock market opened 2016 with a huge selloff, and investors blamed the circuit breakers for making a bad situation worse.
Within days of launching, the mechanism was dismantled, leading to Xiao’s dismissal.
“I feel a heavy responsibility,” said Liu, in his first public comments since being appointed to the CSRC last month. He was previously chairman of the Agricultural Bank of China.
Liu said that the plans to shift to a registration system for initial public offerings (IPOs) of stocks would take time, requiring research and feasibility studies, technical preparations and new rules, reported Reuters.
The CSRC has been discussing transformation of its current approval-based system — seen as distorting the IPO market and encouraging official corruption — to a system that would let the market decide who can list and for how much, since 2014.