HKEx plans to cut trading halts to half an hour

PUBLISHED : Saturday, 28 July, 2012, 12:00am
UPDATED : Saturday, 28 July, 2012, 12:00am


Share-trading halts will only need to last for 30 minutes, instead of half a day or longer, after company announcements that might affect their stock price, according to a Hong Kong Exchanges and Clearing (HKEx) proposal.

The proposal follows criticism that the long suspensions after the August 10 hacker attacks last year left local investors at a disadvantage.

The attacks crashed the company announcements website, cutting investors' access to company news, prompting the HKEx to suspend seven companies that were making transactions or results announcements in the exchange's lunch break. It also suspended 419 derivatives linked to the stocks, and trading only resumed the following day after a back-up website was set up.

The lengthy suspension led to criticism that big players could still trade on the London markets but many local investors lacked the resources to do so.

Companies are now not allowed to publish price-sensitive announcements during trading hours. If a disclosure obligation is triggered during trading hours, trading in the company's shares must be suspended immediately and last for a half or full day. The shares only resume trading in the next session after the announcement.

According to a consultation paper released yesterday, companies would be allowed to announce price-sensitive information during trading hours but would have to ensure trading in the shares stopped for at least 30 minutes. All orders entered before the halt will be cancelled automatically at the time of suspension.

Any resumption would take place on the quarter hour or the half hour.

A 10-minute price auction would be held to determine the opening price for the resumption of trading.

The HKEx review found that most leading overseas markets allowed publication of price-sensitive announcements during the day, and trading either continued uninterrupted or resumed after a short halt.

'Given today's technology, the status of Hong Kong as an international financial centre and the increasing globalisation of share trading, there is a clear need for the dissemination of listed issuers' announcements to be more timely and for the duration of any break in trading to be kept as short as possible,' HKEx listing head Mark Dickens said.

'Increasingly, overseas issuers are choosing to list on our stock exchange. If they are listed on another exchange, investors overseas may be able to read their announcements during trading hours and continue trading.

'Trading halts would help avoid any disadvantages to Hong Kong investors in terms of information access and trading when an issuer is listed in Hong Kong and overseas.'

First China Securities chief Kenny Lee Yiu-sun backed the proposal.

'Hong Kong's suspension period is too long compared with other markets,' Lee said. 'Thirty minutes ... should be enough for retail investors to digest an announcement.'

The HKEx also unveiled measures to tighten curbs on issuers of structured products.