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hkex’s severe weather trading is about to take effect.

on september 23, the hong kong stock exchange will officially implement arrangements to maintain market operations in severe weather. securities times reporters noticed that at present, the trading arrangements for severe weather have been updated on the official website of the hong kong stock exchange, showing that "if the hong kong observatory hoists a typhoon signal no. 8 or above or issues a black rainstorm warning, or if the hong kong government announces an 'extreme situation', all products in the securities market and derivatives market will maintain trading services and operations. if the above-mentioned severe weather occurs on the trading day of the shanghai-shenzhen stock connect, the trading of the shanghai-shenzhen stock connect will also continue."

according to a video released by the hong kong stock exchange, yao jiaren, deputy chief executive of the hong kong stock exchange group, said: "i am very grateful to the sar government, regulators and market stakeholders for their continued strong support for this plan. this is also an important step for us to promote the development of the hong kong market. in the future, hong kong's stock and derivatives markets will no longer be delayed or closed due to typhoons or heavy rains."

all parties are ready

regarding the upcoming reforms to bad weather trading, yao smart securities ceo xu yibin said: "we are ready for bad weather trading arrangements. we have arranged enough staff and completed the drills." he said that in order to take care of the needs of colleagues, remote work arrangements have been made to ensure that bad weather trading can operate smoothly. "customers are already accustomed to online trading channels. they can log in to the online platform and mobile app at any time of the day to buy, sell and settle. in bad weather, they can complete transactions without leaving home."

the chairman of the hong kong association of banks, ms. lam wai-hung, said that the hong kong association of banks has been working with the industry to provide advice on the promotion of the severe weather trading plan. "our members of the association are very well prepared. first of all, fps operates 24 hours a day. many banking services can also be completed electronically. for example, in severe weather conditions, investors can continue to use online banking to trade stocks and derivatives; bank branches will not be open in severe weather. investors should also pay attention to the latest cheque clearing arrangements. in the future, cheques deposited before the cheque cut-off date on the day before the severe weather trading day will be settled as usual, facilitating the fund allocation needs of investors and securities brokers."

zhao yinren, head of the securities department of the asian securities industry and financial markets association, said that the ability of the market to operate normally around the clock is one of the important attractions of hong kong as an international financial center. he said: "in fact, many of our brokers and financial service providers are already able to operate 24 hours a day in different corners of the world. the investor group of the hong kong market is becoming increasingly diverse, and it is interconnected with the a-share market. therefore, it is very important to ensure that the hong kong market and the interconnection mechanism can operate fully on every trading day to support investors in global asset allocation in the region."

ding chen, president of csop asset management, said that the connectivity has been developing in recent years, attracting more and more mainland investors to participate in the trading of hong kong stocks and hong kong etfs. for example, the a-share market will not be closed due to typhoons. if the hong kong market is closed, it will cause a lot of inconvenience to mainland investors. she said: "at the same time, there are many funds and products investing in a-shares in the hong kong market, and issuers also need to make daily investments through the connectivity. we very much welcome the arrangement of continuing to open the market on typhoon days. it allows investors in both places to have fair trading opportunities, and it will also have a very positive effect on our future product development."

hong kong financial services and the treasury bureau director paul chan said that the severe weather trading reform is an important result of the concerted efforts of market participants and stakeholders to overcome all difficulties. the financial market does not want uncertainty, so after we implement this reform, the hong kong market will be aligned with the international market and have the same practices. as an international financial center, hong kong's positioning is to continue to reform and optimize different trading mechanisms, and play a better role in connecting mainland and overseas capital.

the market has been closed several times due to bad weather

just over 10 days ago, due to the impact of typhoon makar, hong kong stocks were suspended for the entire day on september 6.

according to statistics from hong kong media, severe weather has caused the hong kong stock market to be suspended 12 times since 2018, including 4 times in 2023. last year, the hong kong stock market was suspended for the whole day on september 1 due to the impact of hurricane saula, and was suspended again on september 8 due to the black rainstorm warning and extreme conditions. the market was suspended for two days in september alone. wind data statistics show that in the first eight months of last year, the average daily turnover of the hong kong stock market was hk$112 billion. if calculated based on this average daily turnover, it means that the hong kong stock market lost hk$224 billion in turnover in the two trading days of suspension in september.

the hong kong stock exchange currently charges buyers and sellers an exchange transaction fee of 0.00565%. based on the reduction of hk$224 billion in hong kong stock transactions, it is roughly estimated that the hong kong stock exchange lost hk$25 million in revenue due to the two-day suspension of trading.

in addition, the suspension of hong kong stocks not only affects the trading of stocks and warrants, but also the futures and options markets. in addition, the suspension of the shanghai-hong kong stock connect and the shenzhen-hong kong stock connect means that the hong kong stock exchange is unable to collect the fees required for mainland transactions from northbound transactions. considering that futures and options transactions have been stable throughout the year and the average daily trading volume of the northbound connect is calculated at hundreds of billions, the impact of a one-day suspension cannot be underestimated.

as early as last year, hong kong's fiscal budget proposed to explore arrangements for the hong kong stock market to continue operating during severe weather conditions. regulators and the industry have formed a working group to discuss the "no closure of the market during typhoons" approach.

in june this year, the chief executive of the hong kong special administrative region, john lee, announced that the hong kong stock exchange would not suspend trading in severe weather conditions. the arrangement will be implemented in late september.

at the same time, the hong kong stock exchange has completed market consultation on maintaining market transactions in severe weather conditions and announced arrangements for normal market opening in severe weather conditions. starting from september 23 this year, regardless of wind or rain, the hong kong market will open normally on trading days and the shanghai-hong kong stock connect will also operate normally.

regarding the arrangements to maintain normal market trading during severe weather that will take effect soon,hong kong exchanges and clearing limitedchief executive officer chen yiting once said, "don't underestimate this move. this measure will allow investors to continue trading without disrupting their risk management plans. this will be a key measure to ensure that we can provide services to investors during trading hours in any weather."

editor/fan hongwei