Self-Match Prevention (SMP)

SMP is an optional and free-of-charge service available in Hong Kong Securities Market that can be used by market participants (i.e. EPs and/or their clients) to avoid unintentional self-trades by rejecting potential self-match order(s) placed through the same Exchange Participant (EP) or multiple EPs.

Cancel aggressive (“CA”) and cancel passive (“CP”) as the order cancellation methods: Each SMP ID must be specified with either one of the two order cancellation methods.  Upon a potential match between two orders bearing the same SMP ID with a designated cancellation method:

1. the incoming order will be cancelled if CA is chosen; or
2. the resting order will be cancelled if CP is chosen.

SMP ID is a unique identifier allocated by the Exchange for market participants to tag in their orders for using SMP service.  Each SMP ID must be specified with either one of the cancellation methods during SMP ID application.  The cancellation method is allowed to be changed after the Exchange’s approval.

EPs can apply for the use of an SMP ID for its proprietary orders and/or for its clients. For the purpose of the SMP Service, clients shall only include direct client(s) of an EP, and where such client is itself an intermediary, the direct client of such intermediary client.

No SMP ID may be applied for use in respect of a client who is an individual (including accounts of individuals and joint accounts of individuals).

SMP ID application for EP itself or its client other than asset management company/fund

Generally, only one SMP ID may be applied for use by an EP for its proprietary orders and only one SMP ID may be applied for each client of an EP, except when there are other independently operated trading unit(s) within the EP or the client for which additional SMP ID(s) may be applied.

SMP ID application for asset management company/fund

In the case of a client which is an asset management company, (i.e. maintains an account with the Primary EP in the name of asset management company), if there is only one SMP ID applied for and approved, the SMP ID can be used for different funds or accounts* managed by the same asset management company.

Alternatively, separate SMP IDs may be applied for use for different funds or accounts^* managed or controlled by fund managers or trading decision makers whose operations are independent from one another. Each fund manager or trading decision maker can use such SMP ID for its managed or controlled funds or accounts^*.

^*Refer to accounts of which trading decision is controlled by the asset management company, e.g. discretionary accounts.

EP itself or its client other than asset management company/fund

An SMP ID may be applied for use by an EP for itself or for a client, as the case may be, together with any associates.  Associates of a company means any of its holding companies, subsidiaries, or fellow subsidiaries, or any associated companies of them. Please refer to section 2, 13 and 15 of the Companies Ordinance for the meaning of associated companies, holding companies and subsidiaries respectively.

EP’s client which is an asset management company/fund

In the case of a client which is a fund, i.e. maintain an account with Primary EP in the name of a fund, an SMP ID may be applied for use by the fund, together with other funds or accounts^* managed or controlled by the same fund manager or trading decision maker.

^*Refer to accounts of which trading decision is controlled by the asset management company, e.g. discretionary accounts.

(Please refer to the Explanatory Notes for more details)

Applicants will not be expected to provide supporting documents when submitting their new SMP ID application.  Following an initial assessment, however, the Exchange may request for supplementary information or documentation such as organization structure, control measures relating to the use of the SMP Service and/or evidence to illustrate independence, depending on the individual circumstances of each application.     

On an ongoing basis, the Exchange may also request such documentary evidence when it deems necessary for the purpose of monitoring the proper usage of the SMP Service.

The SMP Service is an optional service.

EPs and its clients should assess their needs and tailor their use of the SMP Service as per their business models, trading strategies and any other considerations as appropriate. They shall comply with the Rules of the relevant Exchange (i.e. SEHK and HKFE), the SMP requirements prescribed by the Exchange from time to time, and the terms and conditions stipulated in respective SMP forms and take steps to prevent and detect improper trading activities, including spoofing, unusual trading practice or non-compliance with any relevant Rules and Regulations. Order cancellations via the use of the SMP Service will be treated as activities initiated by the relevant EP and/or its clients and the use of the SMP Service cannot be used as a defence of any market misconduct / manipulative behaviour.

In addition, EPs and its clients should note that the approval of the use of SMP ID(s) does not constitute any endorsement of the Exchange on the trading activities related to the orders tagged with the respective SMP ID(s).

In particular, Exchange’s approval of SMP IDs do not constitute any endorsement on trades executed amongst orders tagged with different SMP IDs.  Same as today, EPs and its clients have to assess themselves as to whether their trades are in compliance with the Rules of the Exchange or any laws or regulations including the Securities and Futures Ordinance and the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.

Yes, the usage of the SMP Service will be monitored.  Usage of the SMP Service for any non-bona fide purpose may constitute a non-compliance of the terms of the SMP Service and may violate the Exchange Rules.  EPs should remind their clients of the same.

EPs should take steps to prevent and detect improper trading activities, including spoofing, and report to the Exchange when unusual trading practices are identified.

The Exchange has the sole discretion in suspending, restricting, or terminating the use of a SMP ID or the SMP Service at any time, by notice in writing to the EP, if there is reasonable cause to suspect or believe that any of the prescribed requirements related to SMP are not properly followed or the SMP ID has been used or involved in any market misconduct or manipulative behaviour, where parties involved in any market misconduct and manipulative behaviour may be subject to legal or regulatory consequences.

EPs are required to, both initially and on a continuous basis, put in place and/or procure its direct client which is an intermediary to put in place relevant control measures to ensure the proper use of the SMP ID and detect any misuse of the SMP Service, including but not limited to measures to:

• ensure the information provided in each application of EP or its clients is accurate and fulfils the requirements prescribed by the Exchange from time to time;
• ensure an SMP ID is only used as stated in the respective SMP forms provided to the Exchange;
• ensure the use of the SMP Service is in compliance with the SMP requirements as prescribed by the Exchange;
• detect misuse of the SMP Service or market misconduct, e.g. spoofing.

EPs are required to put in place and/or procure its direct client which is an intermediary to put in place relevant control measures to ensure the proper use of the SMP ID and detect any misuse of the SMP Service.  Please refer to the FAQ “What are the expected control measures for using the SMP Service?” for more details. 

All products in the securities market are available for SMP.

SMP will only be applicable in Continuous Trading Session (CTS).  SMP is not available for auction matching, while SMP ID is allowed to be tagged with At-auction Limit Order (ALO) during auction sessions.

SMP will be applied to board lot order types only during CTS, including Limit Order (LO), Enhanced Limit Order (ELO), Special Limit Order (SLO) and Quote.

ALO with SMP ID carried forward from Pre-opening Session to CTS will also be available to SMP.

No, the cancellation reason due to SMP or information related to SMP will not be disseminated to the market via OMD-C.

EPs need to enhance their BSS to support the tagging of SMP ID in their order messages. For more details, please refer to the OCG-C interface specification. 

For EPs who do not plan to use SMP service or extend SMP service to their clients, no system change is required.

There will be no impact to order priority for orders with SMP ID. All orders are processed by the matching engine according to the time sequence upon arrival.

EP should submit the “Application for the Use and Maintenance of Self-Match Prevention (SMP) ID in Securities Market (SMP ID Maintenance Form)” to create SMP ID. HKEX will review the application and assign the SMP ID to the EP if the application is successful and such EP will be the Primary EP of the SMP ID. Primary EP will be notified via SMP ID Full Image Report and SMP ID Delta Change Report on Electronic Communication Platform (ECP).

Primary EP should submit the “SMP ID Maintenance Form” to apply for sharing an existing SMP ID with Additional EP(s).  Additional EP(s) should also submit the “Use of Existing SMP ID Form” to apply for using the existing SMP ID of the Primary EP.

HKEX will process the sharing application after receiving both “SMP ID Maintenance Form” and “Use of Existing SMP ID Form” for the same existing SMP ID.  After the sharing of the existing SMP ID application is completed, Primary EP and Additional EP(s) of the SMP ID will be notified via SMP ID Full Image Report and SMP ID Delta Change Report on Electronic Communication Platform (ECP).