HKEX to Introduce Pre-Opening Session, Index Basket Order Trading Mechanism

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Last updated at: (Beijing Time) Tuesday, December 18, 2001

HKEX to Introduce Pre-Opening Session, Index Basket Order Trading Mechanism

The Hong Kong Exchange and Clearing Limited (HKEX) will introduce a pre-opening session for order matching by single price auction, and an index basket order trading mechanism.

The Hong Kong Exchange and Clearing Limited (HKEX) will introduce a pre-opening session for order matching by single price auction, and an index basket order trading mechanism.

The pre-opening session will determine a fair opening price andreduce the loading of the system arising from the large number of order inputs and trade execution messages at the commencement of the morning session, said Lawrence Fok, deputy chief operating officer of HKEx, at a media briefing Tuesday.

The pre-opening session will consist of an order input period from 9:30 a.m. to 9:45 a.m.; a pre-order matching period from 9:45a.m. to 9:50 a.m.; and a blocking period from 9:58 a.m. to 10:00 a.m..

Pre-opening trades are trades concluded before the commercementof the morning session, including those concluded on the previous day but not recorded in the system.

Under current rules, these would be entered into the system in the first 15 minutes of the morning session. After introduction ofthe pre-opening session, stock exchange participants will be allowed to input pre-opening trades into the trading system duringthe order input and pre-order matching periods, in addition to theexisting first 15 minutes of the morning session.

The index basket order trading mechanism will provide for indexbasket trading, including index arbitrage.

It will introduce an additional order data design so that an order may contain a basket of orders based on the constituent stocks of an index with a derivative product traded on the exchange.

AMS/3, the Third Generation Automatic Order Matching and Execution System, will recognize this basket as a single order.

Initially, only basket orders based on the Hang Seng Index willbe allowed. Baskets on order tradable indices will be considered when there is a market demand.

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