Proposed rule changes for electronic trading of Hang Seng Index (HSI) futures and options are aimed at protecting clients during extreme market movements, according to the Hong Kong Futures Exchange.
Under the new rules, traders will not be able to place 'market' orders to buy or sell at the prevailing market price. Instead, they will have to specify a price.
The exchange said that at present, if the market made an extreme movement floor traders could decide on behalf of their client whether or not to execute the order.
However, computers would not be able to make this judgment.
'Currently, floor traders can advise their clients who give a market order when the current market becomes extreme, but in future computers will not make this kind of judgment,' the exchange's chief of product development department, Calvin Tai, said.
The exchange has proposed moving trading of HSI futures on to its Hong Kong Futures Automated Trading System on August 2, with options to follow on September 1. The two products, which are now traded by the open outcry method, account for more than 90 per cent of exchange turnover.