THE way is clear for the Hong Kong Futures Exchange to move to electronic trading on August 16, following successful trials of the system yesterday. The exchange said the four-session test had gone as planned and that more than 80 per cent of members were satisfied with the system's performance. The exchange's commission which previously said it would be happy with a system that performed without problems at 3.5 times the normal daily trading volumes, will decide early this week whether it wishes to go ahead with the planned migration of Hang Seng Index (HSI) futures to its Hong Kong Automated Trading System (HKATS). It would then have to seek the approval of the Securities and Futures Commission. HSI options would make the switch about four weeks later, ending 13 years of open-outcry trading. The commission observed the testing, but said a decision on whether to approve the August 16 migration would not be made until it had analysed the test results more closely. In yesterday's test, the system was stress-tested at more than 4.5 times the normal trading volume, or 3.3 times its historical peak trading volume. The HKFE reported a higher number of deals were submitted in three of the four sessions, but could not say whether any of the test participants had behaved suspiciously. Problems were experienced in a July 17 test when some brokers submitted orders massively in excess of their market share. Since then, the HKFE has imposed strict restrictions on the trades being done during the tests. By 4.30 pm yesterday, the HKFE said it had received reports from 98 members, indicating that 82.7 per cent were comfortable with the performance of HKATS and 17.3 per cent were not. Eugene Law, director of Celestial Commodities, said he was satisfied with the overall performance, although he felt there was still 'room for improvement'. 'On the whole, the response time was acceptable.' He said accessing real-time market information over the system had put a strain on it, but that the problem had been solved by making the information available on a request basis, rather than constantly. At Timber Hill Hong Kong, managing director David Friedland said the first three sessions of the test had gone smoothly, although there were some delays in the fourth session. 'In the clearing trade window, we had delays of up to 30 seconds,' he said, but added that the delays could be even longer on a busy day with the open outcry system. He said he was keen to see the HKFE move to an automated trading system so that it could better compete with other exchanges around the world, which have already moved to electronic trading. A number have Hang Seng Index products or are preparing to launch them. The HKATS system is already used to trade in the exchange's other products. However, HSI futures and options account for more than 90 per cent of the exchange's trade. In yesterday's test, the exchange issued members with instructions to submit orders that would simulate levels of trading from 1.8 times to 3.3 times the historical peak trading volume - the highest levels of trade the HKFE has simulated so far. The move to a fully automated trading system was originally scheduled for August 2, but was delayed after earlier tests on July 24 showed the system reached capacity at five times the normal trading volumes or three times the peak trading volume and logged out some members. Since the postponement, there have been two further tests. The first, on July 31, simulated trades of up to four times the exchange's normal trading volume.