China's shares had a torrid start to the new year with the Shanghai Composite tumbled 6.85 percent to 3296.66 and the Shenzhen Composite plunged 8.1 percent. The CSI 300 briefly plummeted 7.02 percent; when that index rises or falls 7 percent, a trading halt in China's markets is triggered for the rest of the session.
Regulators announced the latest step in its attempts to tame the wild gyrations in its stock markets back in September and was introduced for the first time Monday
Here is what you need to know:
What is a circuit breaker?
A circuit breaker refers to measures put in place to avert panic in markets by putting temporary halts or a freeze in trading if, for instance, the index in question falls by a pre-determined level.
Read MoreU.S. circuit breakers explained
How will the circuit breaker work in China?
The proposed mechanism will be tied to the benchmark CSI300 Index, which tracks the largest listed companies in Shanghai and Shenzhen, where a move of 5 percent in either direction from the index's previous close will trigger a 30-minute trade suspension across the country's equity indexes if the move occurs before 2.30 pm local time. After that, a 5 percent move will freeze trading until the market close at 3.00 pm.
Meanwhile, a 7 percent rise or fall in the CSI300 Index will prompt a trading halt in the Shanghai and Shenzhen stock exchanges for the rest of the day, the statement posted on the exchange's website said. Both circuit breakers will only be activated once a day.
How do things work currently?
Under current rules, individual stocks and index futures are allowed to move a daily maximum of 10 percent from the previous closing level in either direction. Trading of a stock stops when it hits the daily trading limit.