Union urges HKEx to scrap closing auction, curb short selling

Hong Kong Exchanges and Clearing should ban the 'unfair' closing auction session and temporarily restrict short selling to restore investor confidence in a deteriorating market, a senior executive of a securities trade union said.

David Wong, the chairman of the Hong Kong Securities & Futures Industry Staff Union, said the recently introduced closing auction session was 'totally unfair to retail investors'.

It was easily manipulated by large market players to artificially control share performance, Mr Wong said.

The union suggested HKEx abandon the closing session and restore the previous mechanism.

On May 26, the stock market operator extended trading hours by 10 minutes, adding a closing auction session during which investors may use tenders to determine the closing prices of stocks. This replaced the old method of using the middle price of the last five orders.

Mr Wong said the closing auction session allowed institutional investors to push up or force down share prices easily, which increased market volatility.

On the last trading day of May, less than a week after the implementation of the closing auction session, trading on the share market was unusually heavy, with HK$15 billion injected into the market in the last 10 minutes - 17 per cent of the day's turnover.