Stockbrokers expect the Hong Kong stock exchange's daily closing auction to establish closing prices for today's half-year end to proceed smoothly, but continue to call on the market regulator to improve the system.
'The regulator last week gave an early warning to brokers and investors that the end of the first half on June 30 may affect the closing auction for the day. This should reduce the chances of a repeat of the chaotic scenes seen on May 30,' said Hong Kong Stockbrokers Association chairman Kenny Lee Yiu-sun.
'However, I believe there is still room to improve the closing auction system as the current format may make it too easy for big players to manipulate closing stock prices,' Mr Lee said.
'The exchange should consider abandoning the system and using the old way to calculate the daily closing prices of stocks.'
The 10-minute closing auction extension from 4pm to 4.10pm was launched on May 26. It allows brokers to determine the closing prices of stocks through auction. The previous system used the middle price of the last five orders.
Legislator Chim Pui-chung, who represents brokers, called for a reform of the system after the chaotic May 30 session, when HK$14 billion worth of shares, representing 17 per cent of turnover for the day, changed hands in the 10-minute extension. In a normal session, about HK$2 billion worth of shares are usually traded in the 10 minute extension.
