The Hong Kong Stock Exchange (0388) officially conducted a two-month consultation on the Hong Kong stock market to maintain its opening under bad weather, and the consultation period will end on January 2 next year. HKEX proposes that trading arrangements will no longer be affected by inclement weather. It plans to open its securities and derivatives markets to all investors as usual during inclement weather, including Stock Connect Southbound and Northbound services, derivatives holiday trading and after-hours trading.
In the Consultation Paper, it was pointed out that in order to give the market sufficient time to prepare, the Task Force recommended that a six-month lead time (i.e. effective July 1) be provided before maintaining trading under adverse weather conditions.
HKEX has published a consultation paper to advise Hong Kong's securities and derivatives markets on maintaining normal operations under adverse weather conditions and to seek market views on the mode of operation and related arrangements. The consultation will last for two months until January 2024, 1.
HKEX Chief Executive Officer Nicolas Aguzin said: "Hong Kong is one of the world's leading international financial centres and the region's premier global risk management and asset allocation centre. As such, it is imperative that the Hong Kong market remain trading normally in adverse weather conditions to facilitate trading for regional and international investors and ensure that they can continue to manage their portfolios and the associated risks, especially when markets for their underlying assets are also open. With reliable technology in place to enable safe and smooth remote work, it is time to synchronize the operations of the Hong Kong market with other major markets around the world."
"With the support of the Hong Kong Special Administrative Region Government and Hong Kong's financial regulators, we are pleased to launch this consultation to propose a new mode of operation for Hong Kong's markets to maintain normal operations in adverse weather conditions, and we are now seeking views from all sectors of the market. This reflects HKEX's determination to enhance the resilience and attractiveness of Hong Kong as a leading global financial centre, offering a wide range of products and platforms to investors around the world. Of course, the safety of people is always an important consideration for us, and we encourage market participants to work remotely as much as possible in inclement weather."
"Your feedback is important to us as we will work closely with the HKSAR Government and other stakeholders to develop the final operating model that will secure Hong Kong's future position as a leading international financial centre," Mr Aguzin said.
Bad weather has led to 5 market closures in the past five years
HKEX said that at present, the arrangements for market operations in adverse weather conditions are linked to the severity of typhoon, rainstorm or extreme weather warnings issued by the Hong Kong authorities. Since 2018, bad weather has led to 11 market closures in Hong Kong, four of which occurred in 4, lasting anywhere from a few hours to an entire trading day.
HKEX proposes that trading arrangements will no longer be affected by inclement weather. It plans to open its securities and derivatives markets to all investors as usual during inclement weather, including Stock Connect Southbound and Northbound services, derivatives holiday trading and after-hours trading.
During inclement weather, trading, post-trade and listing arrangements will be essentially the same as on a normal trading day, subject to some necessary adjustments to ensure the operational resilience of the market and the safety of market participants. Some services provided by physical locations will not be available.
For example, in case of inclement weather, certain top-up waivers are recommended for participants who are unable to deposit physical securities with the Clearing House for settlement due to the closure of physical business sites. In addition, if there is inclement weather on the last register day of some corporate actions, it is advisable to postpone that date as corporate action participants holding physical securities will be affected by the closure of physical business sites. HKEX intends to publish appropriate announcements on its website and systems to remind participants and investors that market trading remains normal and that certain market functions are arranged differently despite the adverse weather being experienced in Hong Kong.
HKEX said that with the support of the HKSAR Government, the SFC and the HKMA set up a Severe Weather Trading Task Force in 2023 to solicit industry views and discuss relevant arrangements for maintaining trading in adverse weather conditions. The working group is made up of a wide range of stakeholders, including financial institutions and market participants, whose input is critical to the development of new operating models.
During the black rain, the car park of Wan Tsui Estate was heavily flooded. (File photo / Photo by Liao Yanxiong)
The bank confirmed that the bank would operate as usual during the inclement weather
The Hong Kong Association of Banks (HKAB) and the Hong Kong Interbank Clearing and Task Force have confirmed that the relevant banking services will operate as usual during inclement weather periods, such as the designated banks and settlement banks of the relevant clearing houses will provide e-Cheque clearing and e-transfer services as normal to fully support the operational and fund settlement needs of the Clearing Participants.
HKEX has also confirmed that its trading, clearing and settlement and market data systems will be remotely accessible online during inclement weather conditions. HKEX has repeatedly optimised its infrastructure and operations, reducing the need for market participants to come to the office to access the system. HKEX will continue to work with market participants and will consider arranging technical testing to help market participants prepare for normal trading during inclement weather.
The consultation period of the consultation paper will last for 8 years and will end on 2024 January 1. HKEX will review the comments received, consult with the Government, the SFC and the HKMA, and then set out the way forward in the consultation conclusions.
The HKMA calls on banks to start pre-planning as early as possible
The HKMA and the banking industry welcome today's issuance of a public consultation paper by HKEX on the proposal to maintain trading in securities and derivatives markets under inclement weather. The HKMA agrees that this proposal, if implemented, will enable local and overseas investors to trade in securities even under extreme weather conditions, which will help enhance Hong Kong's competitiveness as an international financial centre.
The HKMA notes that banks are encouraged to start preliminary planning and preparation work as early as possible to shorten the time for implementation of the proposal, taking into account that the implementation of the proposal may involve system changes, although public consultation is still ongoing.
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