“As an international financial centre, Hong Kong has no reason not to follow the practice,” he said, adding halting trading during severe weather was “abnormal” given most transactions were electronic.
Under the new arrangement, investors will be able to trade Hong Kong stocks and derivatives, and buy mainland A-shares and other products through the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect during severe weather.
The city abandoned its physical trading in 2017 in favour of electronic transactions but remains among the very few major markets that suspends transactions during extreme weather.
Typhoons and severe rainstorms have forced the market to shut down 11 times since 2018, according to exchange data. In 2023 alone, HKEX had to stop trading because of typhoons Talim, Saola and Koinu, and several black rainstorms.
Lee referred to a recent public consultation by Hong Kong Exchanges and Clearing (HKEX), which showed that 90 per cent of market participants, including brokers and banks, expressed support for the new arrangement.
“Not suspending trading during severe weather can strengthen HKEX’s competitiveness and enhance Hong Kong’s role as a gateway for both global and mainland markets,” Lee said.
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said in a media briefing that as an international financial centre, Hong Kong should serve the interests of all local, mainland and international investors.
“If the market closure falls on an index rebalancing date, it will affect institutional investors in making corresponding transactions for position adjustment, leading to tracking errors,” he said.
Wilfred Yiu Ka-yan, deputy CEO of HKEX, agreed it was important to match international practices as major overseas exchanges in the United States, mainland China and Japan continued trading amid severe weather.
Yiu said the exchange would require all brokers to allow their staff to work from home and have their system ready for investors to trade while a typhoon signal No 8 or above was raised or a black rain signal issued.
“Most brokerage firms already allowed their staff to work from home during Covid-19, while most investors can use digital methods to trade stocks and make payments. We believe the market is ready to continue to remain open during severe weather conditions,” he said.
As some small brokers might need more time to upgrade their system, the exchange would give them until the end of the year to settle any outstanding payment obligations made during market trading on bad weather days, he added.
But Yiu said their trading would be restricted until they made full repayment to the exchange, and after the end of this year, all brokers must ensure their systems were ready to trade remotely during bad weather.
Hong Kong bank branches will remain closed during a typhoon signal No 8 or higher and black rainstorm warnings, but the lenders will maintain digital banking transactions to support stock and derivatives market transactions.
Carmen Chu, executive director of the Hong Kong Monetary Authority, said physical cheque deposits before a typhoon hit would continue to be settled during the warning signal period.
The Hong Kong Investment Funds Association, which represents Hong Kong-based international fund houses, also welcomed the government’s move.
“To maintain the competitiveness and relevance of the Hong Kong stock market, and to live up to the name of an international financial centre, implementing this measure is imperative,” CEO Sally Wong said.
“With the advent of technology and the evolving work arrangements, which were well-tested during Covid-19, and that the government has indicated that they will render support to SME broker firms to enable them to get prepared, we believe that the market is fully geared up for the implementation.”
Lawmaker Robert Lee Wai-wang, CEO of Grand Capital Holdings, said that as trading had gone digital, it was reasonable to allow markets to stay open during bad weather and catch up with international practices.
Finance sector lawmaker Ronick Chan Chun-ying agreed the move would allow the city’s stock market to align with global trends.
“Hong Kong’s capital market has large participation from global investors. They need to rebalance their global portfolios on trading days. Many Hong Kong-listed companies are also listed in mainland China and overseas,” he said.
“Therefore, local, mainland and international investors do not wish to miss trading and investment opportunities due to Hong Kong’s local weather.”
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June 18, 2024 at 08:08PM
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Hong Kong stock exchange to continue trading during typhoons from September 23 - South China Morning Post
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