Securities Market

The POS is an additional trading session of 30 minutes, in the form of a single price auction, which takes place before the Morning Trading Session.  It accommodates potentially market moving overnight news and events, and facilitate an orderly and smooth price discovery process. It helps to determine a security’s fair opening price by bringing together buying and selling interest, and then executing trades at a single price point, where maximum volume can be traded.

POS covers only equities (including depository receipts, investment companies, preference shares and stapled securities), funds (including Exchange Traded Funds (ETFs) and REITs) and leveraged and inverse products (L&I Products) (together the “POS Securities”).  Debt securities, structured products (including Derivative Warrants (DWs), Callable Bull/Bear Contracts (CBBCs) and Inline Warrants (IWs)), equity warrants and rights are not covered by the POS.  Order input on these non-POS Securities during the POS will be rejected.

A price limit of ±15% in POS in the securities market is adopted in order to prevent excessive price movement during any high volatility scenarios (by controlling the price of at-auction limit orders input during POS). HKEX is of the view that a ±15% price limit from the previous closing price would be suitable as it takes into account the larger room for price discovery inherently necessary for an opening auction while not being overly restrictive. Internationally and in recent years, it is observed that a trend of adopting price limits/collars which may be applicable to POS as well. It should also be noted that there would be certain pre-defined scenarios where the price limit feature will not apply, such as when the previous closing price is absent (e.g. for IPO stocks) or for stocks resuming from trading suspension*. The ±15% limit will not be applicable to these stocks and the price discovery function would not be impacted. In case a stock cannot open in POS due to the ±15% price limit, trading in such stock will continue as usual during the Continuous Trading Session (CTS) without a price limit. Based on past statistics, only a very few number of stocks would move more than 15% in POS on a daily basis versus their previous closing prices, and they represent a very small portion of market turnover.

* For stocks resuming from a trading suspension, the price limit check will not be applied for the first day of trading resumption only.

During the POS, only at-auction orders and at-auction limit orders are accepted, and these order types can only be entered starting from 9:00am (the beginning of the Order Input Period).

An at-auction order is a market order without a specified price. It enjoys a higher order matching priority than an at-auction limit order. It will be cancelled automatically after order matching. Investors who place at-auction orders should note that the final traded price (i.e. final IEP) is not known at the time of order input and may not fall within their expected price range.

An at-auction limit order is a limit order with a specified price. After order matching in the POS, unfilled at-auction limit orders with input price not deviating 9 times or more from the nominal price will be converted to limit orders and carried forward to the Morning Trading Session.

Exchange Participants are allowed to report the pre-open trades within the first 15 minutes of the Morning Trading Session.

For POS Securities, the POS is an additional period for reporting pre-open trades. Input of pre-open trade (for both Direct Business and Non-direct Business transactions) for POS Securities is allowed during the POS from the start of the Order Input Period until matching happens (i.e. from 9:00am to the time of matching which is a random time between 9:20am-9:22am).

During the Continuous Trading Session, orders will be matched continuously and automatically by OTP-C when the specified prices of buy orders and sell orders match. Only limit orders, enhanced limit orders and special limit orders will be accepted during this period.

During the POS, orders for POS Securities are allowed to be entered into OTP-C for a single price auction:  

1. During the Order Input Period, No-cancellation Period and Random Matching Period, only at-auction orders and at-auction limit orders will be accepted. These orders will be accumulated and updated but no matching will occur during these periods.


2. At the end of the Random Matching Period, orders are matched in order type (at-auction orders carry a higher matching priority), price and time priority, at the final IEP.

There are a number of differences in the information disseminated during the POS and the Continuous Trading Session and they are further explained as follows:

• Nominal price

During the POS, the nominal price of an issue of securities will be equal to the IEP (if the IEP is available) or the previous closing price (if the IEP is not available) of the issue. During the Continuous Trading Session, the nominal price of a security determined by comparing the current bid price, current ask price and last recorded price /previous closing price, as the case may be of the security.

• Best bid /ask prices

During the POS, the best bid price and best ask price means the IEP or, if the IEP is not available, the most competitive prices on the corresponding side (i.e. buying or selling).

During the Continuous Trading Session, the best bid price means the highest bid price and the best ask price means the lowest ask price.

• Primary queue

During the POS, the primary queue means the queue of at-auction orders and at-auction limit orders with a specified price at or more competitive than the IEP. In case of buying, the specified price equals or is higher than the IEP; and in case of selling, the specified price equals or is lower than the IEP. If the IEP is unavailable, the primary queue is the queue of at-auction limit orders with the most competitive specified price, in the case of buying, the best bid price, and in case of selling, the best ask price.

  During the Continuous Trading Session, the primary queue is the queue of orders with the most competitive specified price, the best bid price for buying, or in case of selling, the best ask price.

Apart from the IEP and IEV, the following market information is also disseminated during the POS, which includes: POS stock indicator, order imbalance information (direction and quantity), Reference Price, Stage 1 and Stage 2 price limits (upper and lower price limits) and Trading States during the POS.

No, the POS will either start at 9:00am or be cancelled. If there is no POS, Continuous Trading will commence as usual at 9:30am.

Input of short selling orders, as at-auction limit orders with a price not lower than the previous closing price, will be allowed in the POS for POS Securities which are Designated Securities eligible for short selling.  However, input of short selling at-auction orders will not be allowed.

In the absence of the previous closing price, input of short sell orders in the POS will be rejected.

A two-stage price limit mechanism is applied to control the price of at-auction limit orders (i.e. at-auction orders and manual transactions are not subject to these price limits) which are input during the POS.