Hong Kong Exchanges and Clearing Ltd is the holding company for the city’s stock exchange, futures exchange and clearing company. Its market capitalisation made it the world’s biggest listed bourse as of the end of 2012.
HKEx evening session worries lawmakers
Legco members concerned that proposed night trading of futures will increase market risks
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The local bourse's plan to introduce six-hour evening sessions for futures trading in March has been criticised by lawmakers, while brokers appear divided.
In a special financial affairs panel meeting held yesterday, lawmakers and some brokers expressed concern over Hong Kong Exchanges and Clearing's plan to launch a new six-hour session for three futures products from 5pm to 11pm from March.
The products will be the Hang Seng Index futures, H-share index futures and gold futures.
The extended hours are aimed at enhancing the competitiveness of the local market.
Adding the evening session will double futures trading to 12 hours, but it is still dwarfed by overseas counterparts such as the US market, which trades 23 hours a day, while Singapore is trading 16 hours a day.
The Democrats' Sin Chung-kai yesterday expressed concern that the new session would add risks. The view was shared by Christopher Cheung Wah-fung, legislator for financial services.
"HKEx may need to consider delaying the launch and consulting the market more to make sure risk management measures are sufficient," Cheung said. "The plans to allow futures trading in the evening while the stock market is not open may lead to speculative or even manipulative activities."
He said that while the stock exchange had a price limit of 5 per cent as a risk management, that was not good enough. The 5 per cent price limit means sell orders cannot be placed with a price below 95 per cent of the contract's last traded price, and no buy order prices can be above 105 per cent of the last trade.
Twenty brokers present at the meeting had split views. Twelve supported the launch of the session to prevent trading being lost to overseas markets and to prepare for the yuan and other commodities products trading. They also said many brokers already have night desks to trade overseas markets' futures.
But eight brokers opposed the move, saying it would add risks and increase costs for brokers.
Several HKEx representatives said its risk management measures and the 5 per cent price limit were appropriate. The Securities and Futures Commission's executive director Keith Lui Kei-kwong said the regulator will ensure HKEx has sufficient control risk management before it approves the launch of the session.
The same meeting yesterday also discussed the controversial Financial Services Development Council which was set up two weeks ago to promote the city's financial industry. But lawmakers yesterday criticised it, saying a private body may escape their scrutiny.
Sin urged the council to be renamed as an advisory committee to reflect its nature, while legislator James To Kun-sun said the council should not be set up as a private company.