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Explainer | How will the Hong Kong stock market’s new typhoon policy work? Who will benefit?
- The government collects HK$280 million and brokers earn a collective HK$420 million in commissions on a typical trading day
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From September 23 Hong Kong will let the stock and futures markets remain open during severe rainstorms and typhoons, scrapping a 70-year-old practice of shutting down during serious weather events.
The move, announced by Chief Executive John Lee Ka-chiu on Tuesday, aims to enhance the city’s competitiveness as an international financial centre. Major markets in the US, Japan and mainland China do not close during bad weather, and Lee said that doing so was “abnormal” given that most transactions are electronic.
Bourse operator Hong Kong Exchanges and Clearing (HKEX), the Hong Kong Monetary Authority (HKMA), and market regulator the Securities and Futures Commission (SFC) have told the city’s 160 banks and almost 600 stockbrokers to prepare for the new arrangement.
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Here is what you need to know about the change.
How does the new arrangement differ from current practice?
At present, the stock and futures markets delay opening if the Hong Kong Observatory issues the No 8 or higher typhoon signal, or the black rainstorm signal, before the market opens at 9:30am. If the market has opened, trading is suspended 15 minutes after one of these warnings is issued. Trading resumes two hours after the signal is lowered to No 3, but if the No 8 warning lasts until noon, or starts after noon, the market shuts down for the rest of the day.
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