Exchange boss urged to give up his bonus
Lawmakers have urged local bourse head Charles Li Xiaojia to voluntarily give up his bonus or pay rise following the exchange's failure to prevent a cyberattack on its website.
The attack crashed its disclosure website and led to heavyweight blue chips, including HSBC, suspending trading last month.
Li, chief executive of Hong Kong Exchanges and Clearing, yesterday was grilled by lawmakers in an ad hoc financial affairs panel meeting to discuss the security breach and the controversial trading halt.
The site was hacked on August 10 in the form of so-called distributed denial-of-service attacks, which prevent access to a website by overwhelming its capacity to handle traffic. That crashed the HKEx regulatory disclosure website and meant investors could not access company announcements.
The HKEx suspended seven companies including HSBC, Cathay Pacific Airways and the HKEx itself, which were making transactions or result announcements during the exchange's lunch break. It also suspended 419 derivatives linked to the stocks. Trading resumed a day after, when a back-up website was set up.
Li was criticised yesterday over the exchange being unprepared for the attacks. 'Will Mr Li [Xiaojia] consider voluntarily giving up his bonus this year or decline any pay rise?,' asked lawmaker Lee Wing-tat during the meeting. 'The hackers' attack has shown that the HKEx has not done enough to safeguard its website. Mr Li should take responsibility.' That view was shared by legislator Emily Lau Wai-hing, who said HKEx senior management should be held to account for the site's poor security.
Li, however, did not immediately say if he would take the lawmakers' advice. According to the annual report of the HKEx, Li earned HK$16.62 million last year, including a HK$7.2 million basic salary and a HK$8.4 million cash bonus, as well as retirement and other benefits.
'As the chief executive, I will take the ultimate responsibility,' Li said, adding the exchange is reviewing the incident to see if anyone in senior management - including himself - should take responsibility.
He said the review would be reported to the board of the exchange but he said yesterday 'was not the day' to provide the results.
Legislator Chim Pui Chung said the suspension had affected investors who could not trade shares. 'The suspension has hurt the reputation of Hong Kong as an international market,' Chim said.
Li said the exchange had to suspend the blue-chip shares in order to protect retail investors, who rely on the website to read company announcements. The decision was supported by the government and the Securities and Futures Commission.
He said the exchange has used newspaper advertisements to alert investors about announcements this month and would use e-mail and other websites to inform them.
In the longer term, the HKEx will consider adopting the US and European method whereby companies continue trading after making an announcement, or stocks are only suspended for a short period of 10 minutes or 30 minutes.
'However, we need to consult the market to see if they are comfortable with such arrangements. The US and European markets are traded by professional investors while Hong Kong is traded by many retail investors. We need to protect the interests of these retail investors to make sure they have the equal access to company information,' Li said.