Many small brokers have voiced opposition to Hong Kong Exchanges and Clearing's launch of the 10-minute closing auction session - which some critics say makes it easier for big players to manipulate the market. Legislator Chim Pui-chung, who represents brokers, has arranged a special session in today's financial affairs panel meeting to discuss the abnormal trading activity in the extended session of May 30. About HK$14 billion worth of shares changed hands in 10 minutes and 21 stocks rose by more than 5 per cent. Launched on May 26, the new session allows brokers to use auctions to determine the closing prices of stocks, replacing the system adopted in 1993 of using the middle price of the last five orders. Many brokers called for changing or even suspending the new system. But if small brokers really think the system benefits big players and puts small brokers and retail investors at a disadvantage, why did they not oppose it a year ago? The HKEx studied the new method in March last year and released a report in July showing 21 of 23 submissions were in favour. One was neutral and one against. Of the 23 submissions, 16 were from big brokers: Barclays Capital Asia, BNP Paribas, BOCI Securities, Celestial Securities, Citigroup Global Capital Markets, Hang Seng Securities, HSBC Broking, I-Access Investors, JP Morgan, KBC Financial Products, Lehman Brothers, Macquarie Equities, Merrill Lynch, Morgan Stanley, SG Securities and UBS Hong Kong. The other submissions were from fund companies Fidelity, HSBC Investments and advisory firm Gandhara Advisors Asia; among banks there were Bank of East Asia, Hongkong and Shanghai Banking Corp, as well as law firm Clifford Chance. The only submission on behalf of small brokerages was from the Hong Kong Stockbrokers Association which expressed several technical concerns but agreed 'that a closing auction session will likely provide a closing price which better reflects the end of day trading, and is more readily understood by market participants and the public'. The HKEx executives in today's meeting must also explain why it chose to go with the fixed-time auction model rather than the random closing auction used in London, Sydney and Frankfurt. The consultation conclusion showed five of the 23 submissions supported random closing auctions, three were opposed, two neutral and the rest had no comment. Clifford Chance's submission supported the random closing model, saying it was a 'key factor in mitigating gaming attempts (because) market participants are unaware exactly when the closing is to take place'. HKEx chief executive Paul Chow Man-yiu attributed the sudden surge in transaction volume and price movement on May 30 to the rebalancing of a number of indices on the MSCI, and that view is shared by many institutional investors and index fund managers. As the exchange was aware of the rebalancing and that the end of the month heightens volatility due to the expiries of futures contacts, it has to be asked why May 26 was chosen to launch the closing auction and not a later date. Planning ahead This week's video and podcast report guest is Arun Abey, co-founder of Australian financial planning firm, ipac Securities. The company was sold to AXA Asia Pacific several years ago, but he remains executive chairman and also leads strategy at AXA.