Introduction
The Hong Kong stock market, known for its closures during typhoon days, is now taking steps towards allowing trades to continue even in severe weather conditions. In a recent announcement, Hong Kong Exchanges & Clearing, the exchange operator, stated that it is seeking feedback from the public on this proposal until January 26. This move aims to address the issue of trading suspensions due to extreme weather, which have occurred frequently in recent years. The plan comes as part of Hong Kong’s efforts to revive its declining trading volumes and improve stock-market liquidity.
Facing Challenges of Extreme Weather
Over the past few years, Hong Kong has experienced numerous incidents of market-wide trading suspensions caused by extreme weather conditions such as typhoons and rainstorms. Since 2018, there have been a total of 11 suspensions, ranging from several hours to a full trading day. Notably, four of these suspensions occurred in the current year alone. This has raised concerns about the market’s ability to function effectively and maintain consistent trading operations during adverse weather events.
A Solution for Revamping Trading Volumes
To address these concerns and revitalize trading volumes, Hong Kong Exchanges & Clearing is considering a new approach. The exchange operator plans to allow securities and derivatives trades to continue as usual even during severe weather conditions. This proposed change would align Hong Kong with other major exchanges that do not suspend trading in such situations. By enabling uninterrupted trading, the market aims to maintain its competitiveness and attract more investors.
Testing and Remote Access
Hong Kong Exchanges & Clearing recognizes the importance of preparing for severe-weather trading. As part of the proposal, the operator plans to conduct testing sessions to ensure the smooth functioning of its systems during adverse weather events. It also emphasizes that its trading, clearing, settlement, and market-data systems will be accessible through remote networks on stormy days. This remote access capability will provide market participants with the flexibility to engage in trading activities regardless of their physical location.
Implementation Timeline
If approved, the stormy-day trading policy is expected to be implemented no earlier than July 2024. This timeline allows for sufficient time to gather public feedback and address any concerns raised during the consultation period. By setting a clear timeline, Hong Kong Exchanges & Clearing aims to provide market participants with a transparent roadmap for the future of trading in adverse weather conditions.
In conclusion, the proposed move to allow trades in bad weather marks a significant step forward for the Hong Kong stock market. By addressing the challenges posed by extreme weather conditions, the market aims to enhance its resilience and maintain its position as a leading global financial hub.
