Typhoon trading to blow in come September
Top News | Themis Qi and Agencies 19 Jun 2024
Hong Kong's stock market will continue trading through typhoons and storms starting on September 23, in line with global markets.
Chief Executive John Lee Ka-chiu said there is no reasonable justification for Hong Kong to stop trading during inclement weather, when other markets remain open.
"Shenzhen and Shanghai are now trading in bad weather," Lee said. "There is no reason why Hong Kong, as an international financial center, should not follow suit."
For years, Hong Kong has been the only market among major financial hubs to shut down during a Typhoon Signal No 8 or Black Rainstorm warning.
The practice has been increasingly regarded as unnecessary after the pandemic, when people found they could work remotely.
The trading halt also drew criticism because it stops flows through Stock Connect that links to markets in Shanghai and Shenzhen.
An average of 125 billion yuan (HK$134.5 billion) a day traded northbound and HK$56 billion southbound on the link last month, while daily turnover on the bourse's main board has picked up from recent lows of HK$80 billion to more than HK$100 billion.
Though smaller brokers had voiced objections to the move, citing personal safety during bad weather, bigger players did not appear to be worried. Leading brokerage Bright Smart Securities & Commodities said keeping the market open during bad weather will have no significant impact on its operations.
To facilitate a smooth transition, authorities announced arrangements yesterday.
Hong Kong Exchanges and Clearing deputy chief executive Wilfred Yiu Ka-yan said all brokerages have been requested to enable remote work.
Though physical banks will remain closed, lenders will continue to handle and settle physical checks received the day before the bad weather.
Smaller participants have been strongly recommended to update their systems, conduct tests and discuss potential actions with employers as soon as possible. Investors have been encouraged to learn about arrangements for their brokerages during bad weather and to shift to digital trading in case brokerages can only provide limited services. For small brokerages that might need assistance, Yiu said there will be a three-month buffer until December 31, 2024.
HKEX will temporarily take over trade receiving and settlement if brokerages apply for such support.
Before the official implementation in September, authorities will announce details in early July and organize tests in July and August to ensure market participants are ready.
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the timetable will not be altered as it is "holistic" and has taken the potential adjustment time needed by small brokerages into consideration.
Changes to allow trading under severe weather are "just incremental" based on remote operations during the pandemic, Hui added.
Editorial: Better late than never
