Hong Kong Exchange and Clearing (HKEx) has said it will review options for its market close as part of its ongoing three-year strategic plan.
As part of an update to its strategic plan for 2010-2012 for the current year, HKEx said it will explore options to enable execution at market close in view of market needs and based “on its experience”. Any related proposals will be put forward for public consultation before implementation.
In March 2009, a 12.5% drop in HSBC shares during the closing auction was widely seen as the result of market manipulation. As a result HKEx abandoned its closing auction and reverted to its previous mechanism, which involves calculating the median of five price snapshots taken during the last minute of the afternoon trading session. Institutional market participants have argued that the absence of a standard auction mechanism makes the trading of some index-based products inefficient.
The updated strategic plan also includes the possibility of scrapping the publication of brokers' trading IDs for securities trades.
“HKEx is aware of some market participants' suggestions about providing broker anonymity in its securities market's electronic trading system, which processes all transactions,” read the document. “HKEx will closely monitor developments in other international markets and carefully consider whether any changes are necessary.”
Furthermore, the latest agenda includes a study into direct market access in conjunction with domestic regulator the Securities and Futures Commission, an analysis into the potential benefits of unifying the exchange's clearing houses and the possibility of reducing tick sizes to enhance the efficiency and liquidity of its market. There are no firm deadlines for any of these initiatives at present.
HKEx first announced its strategic plan in March last year, which it devised to help it adjust the developing competitive landscape and enable it capture more business in mainland China.