THE future of the stock exchange's ambitious multi-million dollar plan for a state-of-the-art automated trading and order matching system (AMS) hangs in the balance, say market practitioners. Some practitioners said they feared cancellation of the project, which was tendered to Logica, on the grounds that stringent stock exchange demands for the proposed system might not be met. The AMS is the bedrock for further market developments at the exchange, including the introduction of regulated short-selling and stock options trading. Exchange chief executive Paul Chow first made public the problems that had to be faced with AMS in an interview with Business Post in February. At the time he only spoke of the possibility of delays in its implementation. Under the current stock exchange plan, the fate of the system being put together by Logica will be decided at a crucial meeting on May 3. Logica is expected to make a new presentation to the exchange's trading and settlement committee convened by Mr Au Son-yiu. Mr Au said yesterday: ''I do not think the project will be cancelled. But we do not know what the exact position is right now. We will find out at this meeting. ''All I can say is that things are not conclusive at the moment.'' Bugs in software to drive the trading systems forced the exchange to reject earlier proposals for the system, which was supposed to be delivered in November. New proposals were drawn up in March and Logica has been working on these since. Mr Au said Logica had brought in new people from the United Kingdom to work on the project and old staff associated with the development team had been removed. If the trading and settlement members accept Logica's presentation on May 3, initial delivery of parts of AMS will begin in July. During the summer, the exchange would then undertake rigorous testing of each aspect of the system and the ways in which different types of software inter-relate. ''They have to be sure of the integrity of the system before they can let brokers loose on it. It has to be pretty well foolproof,'' said the practitioner. Should everything go well and the tests end in success then full implementation of AMS could begin in October. A phased programme would bring in all Hongkong-listed stocks over a period, possibly as long as a year. The auto-matching system will transform trading at the stock exchange as all trades that have been entered by keyboard into the system are matched in seconds, according to trading conditions, on basis of the oldest order and at the best price. Earlier this year the London stock exchange scrapped its AMS system called Taurus that was due to be implemented in the spring of 1994. Scrapping of the Hongkong project would be seen as a major embarrassment to regulatory executives.
