Market Information - Hong Kong

What is Closing Auction Session?
The Closing Auction Session is a market structure change implemented by the HKEX. During the session, market participants interested in trading at the closing price may input buy and sell orders. These orders will interact with each other to form a consensus closing price for each security and orders are executed at that price. The CAS commences immediately after the Continuous Trading Session and will last for about 8 to 10 minutes.

Phase 1 will be launched on 25 July 2016 and is applicable to:

• Hang Seng Composite LargeCap Index and Hang Seng Composite MidCap index constituent stocks;
• H shares which have corresponding A shares listed on the exchanges in Mainland China; and
• all ETFs.

The finalised list of the Phase 1 CAS securities can be found on the HKEX website here. Subject to a review of Phase 1 by HKEX and approval by the Securities and Futures Commission, Phase 2 will tentatively include all equity securities and funds not covered in Phase 1. For more information, please refer to HKEX’s CAS microsite , website and FAQ.

How to submit orders for Closing Auction Session in iOCBC?
Open orders from Continuous Trading Session will automatically carry over into CAS if order price is within price limit. Clients can also submit the following order types to participate during CAS.

• At-auction;
• At-auction Limit; and
• Limit (will be automatically converted to At-auction Limit order by iOCBC).
• Enhanced Limit (will be automatically converted to At-auction Limit order by iOCBC).

During the Reference Price Fixing Period, the exchange does not accept new orders. Hence, orders submitted to iOCBC during this period will be stored and released during the Order Input Period.

What is Volatility Control Mechanism?

The VCM is based on the regulatory guidance of the Group of Twenty (G20) and International Organization of Securities Commissions (IOSCO), and is designed to prevent extreme price volatility from trading incidents such as a “flash crash” and algorithm errors, and to address systemic risks from the inter-connectedness of securities and derivatives markets. Many international exchanges have implemented some form of volatility control mechanisms to control extreme price volatility.

HKEX’s VCM

HKEX VCM will trigger a cooling-off period for 5 minutes if the price deviates more than a predefined percentage within a specific time frame. The VCM for the securities market will be implemented on 22 August 2016. For more information, please refer to HKEX’s VCM microsite, website and FAQ.

Instruments covered under the VCM?

In the securities market, VCM will only be applied to Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) constituent stocks (together the VCM securities). The finalised list of the VCM securities can be found here.

When is the VCM applicable?

VCM is not applicable during the Pre-opening Session and Closing Auction Session. It is only applicable to board lot order input during the Continuous Trading Session (CTS) except for the:

• first 15 minutes of the Morning and Afternoon CTS; and
• last 20 minutes of the Afternoon CTS.

How can I tell when a stock has triggered VCM and is in Cooling-off Period?

In iOCBC Market Info page, the stock will have “VCM” appearing under the Remark column. Left-clicking on VCM will launch a separate window which will provide further details. Please note this feature is not available on TradeMobile.

What triggers the VCM?

During the CTS, the potential trade price of a VCM security is continuously checked against a dynamic price limit of ±10% based upon the reference price, which is the last traded price 5 minutes ago.

If the potential execution price is outside the above-mentioned price limit, the order concerned will be rejected and a 5-minute cooling-off period will be triggered immediately.

Determination of VCM Reference Price

The VCM monitoring starts at 9:45am for the Morning Session. The first reference price for the trading day should be the last traded price executed 5 minutes before 9:45am. Thereafter the reference price will be updated at the end of each one minute interval.

If there was no trade execution 5 minutes before the Morning Session, HKEX will search for the last traded price as the reference price. This search can extend back until the market open of the current Morning Session where the auction price established during the pre-opening auction will be used as the reference price. If there is no trade execution from market open of the current Morning Session to 5 minutes before the start of the VCM monitoring, HKEX will use the first traded price executed in the current Morning Session as the reference price until there is a subsequent execution.

It should also be noted that the reference price established during the Morning Session will not be brought forward to the Afternoon Session.

The VCM monitoring starts at 1:15pm for the Afternoon Session. If there was no trade execution 5 minutes before the Afternoon Session, HKEX will search for the last traded price as the reference price. This search can extend back until the market open of the current Afternoon Session. If there is no trade execution from market open of the current Afternoon Session to 5 minutes before the start of the VCM monitoring, HKEX will use the first traded price executed in the current Afternoon Session as the reference price until there is a subsequent execution.

How does the HKEX handle orders when the VCM is triggered?

During the 5-minute cooling-off period, the VCM security can continue trading but will only be allowed to trade within a fixed price band (±10% from the reference price).

Order Handling when VCM is triggered

Order Handling during the Cooling-off Period

Any incoming aggressive orders (i.e. buy order > upper price limit and sell order < lower price limit) outside the fixed price band will be rejected by HKEX immediately.

Passive orders (i.e. buy order ≤ upper limit and sell order ≥ lower limit) will still be accepted by HKEX to allow building of liquidity.

If the Morning Session closes before the end of a cooling-off period (e.g. a cooling-off period starting at 11:56), the remaining time of the cooling-off period will not be brought forward to Afternoon Session.

What happens after the Cooling-off Period?

After the cooling-off period, trading in the CTS will resume to normal. For each VCM security, there will be a maximum of one VCM trigger in each trading session (Morning Session and Afternoon Session are counted as two separate trading sessions). When normal trading resumes after the VCM, there will not be any VCM price monitoring imposed on that VCM security for the remainder of that trading session.

View commission rates and charges.

Customers are able to select their order types available in Hong Kong Exchange.

1) Limit Order (LO)

2) Enhanced Limit Order (ELO)

3) Special Limit Order (SLO)

4) At-Auction Order (AO)

5) At-Auction Limit Order (ALO)

For more information, click here

View list of holidays

The following trading abbreviations will appear in the “Remarks” column on iOCBC trading platform.To find out more information on the corporate action or trading status on the listed companies, kindly refer to the official websites of the respective Exchanges.