Move to electronic trading postponed
The Futures Exchange has announced it will postpone Monday's scheduled shift of Hang Seng Index (HSI) trading to an electronic system to allow for further testing.
A new date for the start-up had yet to be set, it said yesterday.
The announcement came after a four-hour meeting by the exchange's board to discuss last Saturday's simulated trading test of the Hong Kong Automated Trading System (HKATS).
According to sources, board members could not reach consensus on the go-ahead of the migration from open outcry, based on the results of the test.
Seven members supported the plan to begin trading HSI futures on Monday but two opposed it, they said.
The futures exchange said the board had decided to adopt a prudent approach to electronic trading.
It also agreed to carry out an additional series of in-house tests in which members would not be invited to participate.
The board's decision was partly influenced by the exchange's consultant - PricewaterhouseCoopers - which had issued a report with a qualified opinion on the start-up of electronic trading on Monday but without a conclusive opinion, the sources said.
Consequently, the board ordered PricewaterhouseCoopers to submit as soon as possible a report with a specific view on the migration plan.
'The board needed a third-party opinion from PricewaterhouseCoopers, but the company did not say whether it supported the plan or not,' one of the sources said.
The futures exchange had originally scheduled to shift its flagship HSI futures to HKATS on August 2, but the plan was delayed to Monday.
The exchange, which has carried out six tests on HKATS, has warned the move could be pushed back to next year because of concerns it might be hindered by the millennium bug if it did not start by September 6.
Exchange officials said yesterday that the additional testing could result in such a delay.
Some traders had complained that the further delay in the electronic trading of HSI futures would jeopardise their business plans.
Trading in Hang Seng Index futures nearly doubled yesterday to 19,678 contracts, as traders tried to capitalise on intra-day spreads.
On Monday, volume amounted to only 9,953 contracts, the lowest daily level in 2.5 years.
According to brokers, the volume was reduced due to fears about the plan to begin trading HSI futures next week.