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.

Stage 1 price limit: applicable to the Order Input Period between 9:00am - 9:15am

The price limits are set at ±15% from the POS reference price, which is the previous closing price of a POS Security (or the adjusted closing price for POS Securities that have undergone corporate actions).

At-auction orders and at-auction limit orders within the ± 15% of the previous closing price can be entered starting from the Order Input Period.  An at-auction limit order which has a limit price outside the permissible price limit will be rejected by the OTP-C.

The Stage 1 price limits and the POS reference price are disseminated to the market via Orion Market Data Platform – Securities Market (OMD-C) before the start of the Order Input Period.

In the absence of a previous closing price (e.g. for IPO stocks) or for stocks resuming from trading suspension[1], the Stage 1 price limit checking will be not be applied for the Order Input Period.

Stage 2 price limit: applicable to the No-Cancellation Period and Random Matching Period between 9:15am - 9:22am

Starting from the No-cancellation Period, the allowable price limits will be further tightened and is set at the highest bid price and the lowest ask price recorded at the end of the Order Input Period at 9:15am.  More specifically:

Stage 2 Upper Price Limit = the higher of the highest bid price and the lowest ask price recorded at the end of the Order Input Period at 9:15am.

Stage 2 Lower Price Limit = the lower of the highest bid price and the lowest ask price recorded at the end of the Order Input Period at 9:15am.

The Stage 2 price limits will remain unchanged for the whole period of No-cancellation and Random Matching Periods and the price limits will be disseminated to the market via OMD-C at the beginning of No-cancellation Period. 

During the No-cancellation Period and Random Closing Period, the prices of newly input at-auction limit orders that aim to be executed during the POS must be between the Stage 2 Upper Price Limit and the Stage 2 Lower Price Limit since the final IEP will only be formed within the Stage 2 price limits, and no orders can be amended or cancelled. 

At this stage, in order to build an order book with deeper liquidity after the market opens, passive at-auction limit orders (i.e. buy order price lower than the Lower Price Limit and sell order price higher than the Upper Price Limit) will still be accepted provided that these orders are within ±15% from the previous closing price.  However, it should be noted that these passive orders will not be matched during the POS since their prices fall outside the range of Stage 2 Upper Price Limit and Lower Price Limit.

In case only buy orders or only sell orders exist (or both do not exist) at the end of Order Input Period at 9:15am, the Stage 2 price limits will be set at ±15% from previous closing price (i.e. same as Stage 1 price limit).

[1] For stocks resuming from a trading suspension, the Stage 1 price limit check will not be applied for the first day of trading resumption only (no matter whether there is trade recorded on the day of trade resumption or not).

In order to prevent extreme price movement during the POS for ETPs (covering ETFs and L&I Products) on their listing day, the ±15% price limit during the POS is applied to ETPs on their listing day, and the ETP’s pre-IPO net asset value per unit is used as the POS reference price for price validation.  ETP issuers is required to publish an announcement on HKEXnews indicating the ETP’s NAV by 5:00pm on the trading day before listing.

As the market is already familiar with CAS, which has been well-accepted, adopting an opening auction model that largely follows the closing auction will facilitate market participants’ understanding of the enhanced POS trading mechanisms. Internationally, it is noted that many exchanges would adopt identical or largely similar auction mechanisms for their opening and closing auctions.

BSS Users are also requested to note that if there is a severe violation of the entitled throttle limit, the corresponding OCG-C session will be dropped. Therefore, it is recommended that BSS should minimize the occurrence of message rejections byadopting below approaches:

1. Implementing a proper flow control and re-submission mechanism. To minimize the occurrence of rejections due to exceeding the throttle limit, BSS should only send the number of messages less than or equal to the entitled throttle limit. In the example above, the BSS should control that no more than 8 messages could be sent to OCG-C in a single throttle window. Any additional messages should be queued in the BSS and be sent in the next throttle window.


2. Synchronizing BSS system clock with GPS. If there is a misalignment of system clock between BSS and OCG-C, messages considered to be sent in two different throttle windows could be counted as being in the same throttle window in OCG-C. For example, the entitled throttle limit is 4, and the BSS sends 8 messages in the first window and 1 message in the next window. However, if all 9 messages arrive at OCG-C in the same throttle window based on OCG-C system clock, the last message will be rejected. Therefore, it is recommended BSS synchronizes its system clock with GPS to reduce the chance of rejection due to throttle window misalignment, and please note that some exceptional cases such as network delay variance may also cause message arrived at misaligned throttle time window and result in rejection.

Note 1:

In this example, the length of value is 2 instead of 1. It is because the length will take into account the null terminator.

Example 2:

If the Alphanumeric Variable Length field is empty/blank, the memory block will be stored as:

• Capped prices will only be available for 1Mbps to 20Mbps circuits and there will be NO capped price for circuits with bandwidth of 30Mbps or above.  The new pricing arrangement is applicable to monthly tariff, installation charge and standby service fee.
• There is also change to certain one-off charge e.g. circuit bandwidth upgrade/downgrade, reconfiguration and relocation fee of specific Accredited Vendors. 
• Introduction of  Application Service Provider (ASP) circuit connection to SDNet/2 

• Securities Trading (OTP-C, Shanghai and Shenzhen Connect)

• Derivatives Trading (HKATS)

• Securities Clearing, Settlement & Depository (CCASS/CCMS)

• Listed Derivatives Clearing (DCASS, CCMS)

• OTC Clear (OCASS)

• Market Data (OMD-C, OMD-D, IIS)

EPs/CPs/CMs/IVs should subscribe not lower than the specified minimum bandwidth. The minimum bandwidth requirements of the respective market systems can be found in the [Price Information / Technical Specification / Service Level of SDNet/2] 

• Securities Trading (OTP-C, Shanghai and Shenzhen Connect)

• Derivatives Trading (HKATS)

• Securities Clearing, Settlement & Depository (CCASS/CCMS)

• Listed Derivatives Clearing (DCASS, CCMS)

• OTC Clear (OCASS)

• Market Data (OMD-C, OMD-D, IIS)

EPs/CPs/CMs/IVs may subscribe more than the minimum bandwidth from the Accredited Vendors in accordance with their business needs.

• Securities Trading (OTP-C, Shanghai and Shenzhen Connect)

• Derivatives Trading (HKATS)

• Securities Clearing, Settlement & Depository (CCASS/CCMS)

• Listed Derivatives Clearing (DCASS, CCMS)

• OTC Clear (OCASS)

• Market Data (OMD-C, OMD-D, IIS)

Closing auction, which allows execution at the closing price, is a trading mechanism commonly used in securities markets across the globe.  During a closing auction, market participants interested in trading at the closing price may input buy and sell orders.  Then their orders interact with each other to form a consensus closing price for each security and orders are executed at that price.

CAS covers all 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).

Securities market

With the introduction of CAS, the securities market closing time has been extended to a random closing between 16:08 and 16:10 from today’s 16:00. 

The trading hours of the securities market under CAS model is as set out in the table below for full and half day trading respectively:

Derivatives market

The closing times of normal trading sessions for Stock Index Futures and Options, Currency Futures and Commodity Futures has changed from 16:15 to 16:30 for a normal trading day and from 12:00 to 12:30 for a half trading day, except on the last trading day of the contracts. The opening time of After-Hours Futures Trading has changed from 17:00 to 17:15.

In addition, trading hours on the last trading day, the final settlement price calculation algorithm and typhoon arrangements also change accordingly. Please refer to the SEHK Circular (Ref: MO/DT/056/16) issued on 17 May 2016 for details.

Yes, unlike short selling order input during CTS which cannot be made at a price below the best current ask price, short selling order input during CAS cannot be made at a price lower than CAS Reference Price (tick rule in CAS).

In addition, similar to the arrangement in CTS, short selling of ETFs by all participants, as well as short selling of other CAS Securities eligible for short selling by certain participants will be exempted from application of tick rule in CAS.  These include Designated Index Arbitrage Short Selling by a Designated Index Arbitrage Short Selling Participant, Stock Futures Hedging Short Selling by a Designated Stock Futures Hedging Short Selling Participant, and Options Hedging Short Selling by an Options Market Maker or an Options Hedging Participant.

The Closing Price (62) of both CAS and Non-CAS eligible securities are disseminated shortly after market close which can take place at anytime during the 2-minute Random Closing period from 16:08 to 16:10.

Reference Price for all CAS and Non-CAS eligible securities is calculated and published in Reference Price (43) message, shortly after the start of Reference Price Fixing Period (RP). For CAS Securities, the upper and lower price limit disseminated in the Reference Price (43) at 16:00 may be adjusted after the end of Order Input session at 16:06.  Reference Price (43) message for each CAS eligible security would be sent again at the end of Order Input session to provide the lower and upper price limits, regardless of whether there is any change. 

The following arrangement is applicable to spot month contracts on last trading day after CAS implementation.

The trading hours remain unchanged for the following products:

• Hang Seng Index Futures & Options (Including Flexible Index Options)
• H-shares Index Futures & Options (Including Flexible Index Options)
• Mini-Hang Seng Index Futures & Options
• Mini H-shares Index Futures & Options
• HSI Volatility Index (VHSI) Futures
• Sector Index Futures
• CES China 120 Index Futures
• Stock Futures & Options
• Currencies Futures & Options
• HIBOR Futures
• MOF T-Bond Futures

For the following products, the closing time has been changed from 16:15 to 16:30 for full day trading and from 12:00 to 12:30 for half day trading.

• HSI Dividend Point Index Futures
• H-shares Dividend Point Index Futures
• IBOVESPA Futures
• MICEX Index Futures
• S&P BSE Sensex Index Futures
• FTSE/JSE Top40 Futures

An At-auction Order is an order with no specified price and is entered into the trading system for execution at the final Indicative Equilibrium Price (IEP).  It enjoys a higher order matching priority than an at-auction limit order and will be matched in time priority at the final IEP. Any outstanding at-auction orders after the end of the Pre-opening Session will be cancelled before the commencement of the Continuous Trading Session. 

An At-auction Limit Order is an order with a specified price.  An at-auction limit order with a specified price at or more competitive than the final IEP (in case of buying, the specified price is equal to or higher than the final IEP, or in case of selling, the specified price is equal to or lower than the final IEP) may be matched at the final IEP subject to availability of eligible matching order on the opposite side.  An at-auction limit order will be matched in price and time priority at the final IEP.  No at-auction limit order will be matched at a price worse than the final IEP. Any outstanding at-auction limit orders at the end of the Pre-opening Session will be carried forward to the Continuous Trading Session and treated as limit orders provided that the specified price of that at-auction limit order does not deviate nine times or more from the nominal price or is one ninth or less of that price.  Such orders will be put in the price queue of the input price. 

During the Continuous Trading Session, the trading system of the Exchange accepts only Limit Order, Enhanced Limit Order and Special Limit Order.

A Limit Order will allow matching only at the specified price.  The sell order input price cannot be made at a price below the best bid price, if available, whereas the buy order input price cannot be made at a price above the best ask price, if available. Any outstanding limit order will join the price queue of the input price.  

An Enhanced Limit Order is similar to a Limit Order except that it will allow matching of up to 10 price queues (i.e. the best price queue and up to the 10th queue at nine spreads away) at one time provided that the traded price is not worse than the input price. The sell order input price can be made at a price of nine spreads below the current bid price whereas the buy order input price can be made at a price of nine spreads above the current ask price.  Any outstanding enhanced limit order will be treated as a limit order and put in the price queue of the input price.  

A Special Limit Order will allow matching of up to 10 price queues (i.e. the best price queue up to the 10th queue at nine spreads away) at one time provided that the traded price is not worse than the input price.  A special limit order has no restriction on the input price as long as the order input price is at or below the best bid price for a sell order or at or above the best ask price for a buy order. Any outstanding special limit order will be cancelled.

Investors may refer to here for details.

During the Continuous Trading Session, the first order (if it is a bid order) must be at a price higher than or equal to the previous closing price minus 24 spreads. The first order (if it is an ask order) must be at a price lower than or equal to the previous closing price plus 24 spreads. The first order (bid or ask) must not in any case deviate nine times or more from the previous closing price or is one-ninth or less of that price. A spread refers to the smallest allowable change in share price.

For details of opening quotations, please refer to Rule 503 of the Rules of the Exchange. The Rules of the Exchange are available here.

Quotations for buy and sell orders other than the opening quotations are governed by another set of quotation rules and a scale of spreads. In particular, a buy order or a sell order must not be made at a price that deviates nine times or more from the nominal price or is one-ninth or less of that price. The spread table is available under the Second Schedule of the Rules of the Exchange. For quotations for buy and sell orders other than opening quotations, please see Rules 505-507A of the Rules of the Exchange.

Quotation rules in general do not apply to at-auction limit orders, except that a buy at-auction limit order or a sell at-auction limit order must not be made at a price that deviates nine times or more from the nominal price or is one-ninth or less of that price.

The spread of security depends on its share price.  The following is the spread table for all securities other than debt.

• The range for order input price is:
  
  
  • for limit order, bid (ask) price is within the range of the best ask (bid) and not lower (higher) than 24 spreads of the best bid (ask) price
  • for enhanced limit order, ask price is nine spreads lower than the current bid or the bid price nine spreads higher than current ask
  • or special limit order has no restriction on the limit price with respect to the best price on the other side of the market

In all circumstance, an order shall not be made at a price that deviates nine times or more from the nominal price, if available, or is one-ninth or less of that price.

• the maximum order size is 3,000 board lots per order
• no restriction on number of outstanding orders per broker ID
• the maximum number of outstanding orders per price queue is 40,000

Non-automatched trades must also be reported to the Stock Exchange and the information of these trades will be disseminated to the market.

• The VCM is only applicable for board lot order input during the Continuous Trading Session (CTS), but not for any orders input during the Pre-opening Session (POS) and the CAS. 

• During the CTS, the potential trade price of a VCM security will be continuously checked against a dynamic price limit of ±10%, ±15% and ±20% for Hang Seng Composite LargeCap, MidCap and SmallCap Indexes constituent stocks respectively based upon the reference price which is the last traded price 5 minutes ago.

• The VCM is triggered if a stock is ±10%, ±15% and ±20% away (for Hang Seng Composite LargeCap, MidCap and SmallCap Indexes constituent stocks respectively) from the last traded price 5-min ago; A 5-min cooling-off period will start.

• Normal trading and VCM monitoring will resume on the VCM-triggered instrument after the cooling-off period. 

While a review of international practice shows that volatility controls in major exchanges in US, Europe and Asia usually cover all equities, HKEX is of the view instrument-level volatility control is much less relevant for low liquidity stocks. Expanding VCM coverage beyond Hang Seng Composite Index (HSCI) constituent stocks means that less liquid stocks that may not fully benefit from the functionality of VCM are also covered. A high number of triggers on a daily basis would also be generated for these stocks according to the back test.

For auction sessions, the current ±15% price limits in the POS and the ±5% price limits in CAS serve to mitigate excess price movements that may occur during the auction periods.

A message will be broadcasted in OTP-C when the cooling-off period is triggered for the specific securities. Information includes: the start time and end time of cooling-off period, reference price and price limits of the securities during the cooling-off period.

Since the information of cooling-off period’s end time has already been included in the message when cooling-off period is triggered, there will be no additional message broadcasted at the end of cooling-off period.

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).

CCASS/3 stands for Central Clearing and Settlement System (also known as CCASS) which is a computerised securities clearing and settlement system developed and operated by Hong Kong Securities Clearing Company Limited (HKSCC).It provides browser based user interface via CCASS/3 Terminal (also known as C3T), straight-through-processing with direct linkage via Participant Gateway (PG) to facilitate CCASS Participants day-to-day operations. Clearing Participants (CPs) can also access risk functions via VaR Platform, which provides tools including Report Access Platform (RAP) and VaR Online to facilitate CPs to conduct risk monitoring and control.

It depends on the number of user account each Participant required for operational needs, a one-off fee of HKD250.00 will be levied for each additional user account. Participants can apply for additional user account by submitting the eService Form – DA 4 “CCASS/ CCMS User Account Application Form” in Client Connect through HKEX Access Management Portal (https://connect.hkex.com.hk/).

The Production PG Server is supplied by HKEX while Participants need to prepare their own PC for PG development and end-to-end test. The reference PC requirement for the PG is available via Client Connect (https://connect.hkex.com.hk/). However, the requirement of the PSS is subject to the Participants’ application.

VaR Platform is a risk engine for risk calculation, which is applicable to HKSCC Clearing Participants (CPs) only. VaR Platform offers risk related tools (1) Report Access Platform (RAP) for retrieval of VaR Platform reports and (2) VaR Online for margin and stress test simulation.

RAP is a platform for retrieval of VaR Platform reports and data files via secure file transfer protocol (SFTP) facility.

CPs can apply for a RAP User ID by submitting the RAP Registration and Maintenance for HKSCC or HKCC/SEOCH or Share Registrarform (eService: TechS 8) via Client Connect (https://connect.hkex.com.hk/) with ip addresses of designated workstations; for details please refer to the RAP Technical Guide.

For CPs who would like to develop their own tools to conduct margin and stress test calculation/simulation, can subscribe to access the optional “RPF folder” for retrieval of RPF by submitting the RAP Registration and Maintenance for HKSCC or HKCC/SEOCH or Share Registrar form (eService: TechS 8) via Client Connect (https://connect.hkex.com.hk/).

CPs should note that due to large file size, retrieval of RPF would require a larger bandwidth, please refer to section 7.1 of the RAP Technical Guide available in Client Connect (https://connect.hkex.com.hk/) for the projected download time under different Securities and Derivatives Network (SDNet) bandwidths.

VaR Online is a browser based tool to facilitate CPs to conduct margin and stress test simulation.

VaR Online is a browser based tool to facilitate CPs to conduct margin and stress test simulation.

VaR Online DA should access VaR Online DA functions via https://idm.hkexposttrade.com.hk/user-management/; while VaR Online Business User should access VaR Online user functions via https://rmcd.hkexposttrade.com.hk/.

If a user is assigned with both VaR Online DA and Business User roles, only one single login will be required. After successful login VaR Online DA functions via user-management URL, the user can enter VaR Online URL to switch to access user functions without re-login and vice versa.

For first time login, user will have to enter user ID and a One-Time Password (OTP) received from the user’s registered email, then setup user’s login password. After that, user will be required to setup channel to obtain OTP by mobile device in the ForgeRock Authenticator App or email, and enter the OTP to login the account.

For subsequent login to VaR Online DA functions or user functions, users will have to provide (1) User ID, (2) Password; and (3) OTP generated from the designated OTP channel (i.e. mobile device or email).

VaR DA or VaR Business User access will be locked after 5 consecutive unsuccessful attempts of login within 30 minutes. An email will be sent to the VaR DA or VaR Business User to notify the account status. To unlock the account:

• For VaR DA, should send email to VaRDA_unlock@hkex.com.hk to request for unlock of DA account.
• For VaR Business User, should request its VaR DA to unlock the user account.

Users have to register separate accounts to access Client Connect (https://connect.hkex.com.hk/) and VaR Online; and obtain OTP from the respective user profile to login.

Each RAP User ID will be restricted to a maximum of 5 times sign-on within 5 minutes. The User ID will be locked once it reaches 5 times within 5 minutes and will automatically be unlocked at every 5 minute interval.  CPs are reminded to avoid any intensive polling of reports / data files.

For example, if a RAP User ID has signed on more than 5 times between 12:45:10 and 12:47:30, the User ID will be locked at 12:47:31 then unlocked at 12:50:00 automatically.

CPs can refer to the technical guide under RAP and VaR Online User Guide available in Client Connect (https://connect.hkex.com.hk/).

CPs should refer to the VaR Platform reports, “MTM and Margin Requirement Report” (RMAMR01 and RMAMR03) for estimates of their end-of-day marks and margin requirement.  Please refer to VaR Platform User Guide available in Client Connect (https://connect.hkex.com.hk/) for report availability and details.

CPs may simulate the end-of-day margin requirement by using VaR Online, while CPs should note that the positions shown in VaR Online (when setting “Used positions” = “Real-time” under the “SETTINGS” tab) include pending positions from current and previous trading days, as well as due and overdue positions which will be updated from time to time throughout the day. For CPs who want to simulate the requirement that is closer to the final figure, may adjust the positions in VaR Online by excluding due positions on the current day and add Exercised Options Trade (EOT) positions accordingly. CPs may refer to VaR Online User Guide available in Client Connect (https://connect.hkex.com.hk/) for details.

After the collateralisation process, CCASS will calculate the actual payment amounts, CPs should refer to the following CCASS reports to fulfil their payment obligations:

• Posting / Collateralisation Result Report (intra-day) (CCMPY01)
• Posting / Collateralisation Result Report (day-end) (CCMPY02)

To mitigate potential under-collateralisation risk if an adverse mark-to-market change is observed after the intra-day call, excess cash collateral will NOT be released during intra-day, rather will only be released during day-end CCASS payment process.

In general, the relationship between Tier P sub-portfolio risk profile and corresponding margin requirements is summarized as follows:

CPs may pledge Specific Stock Collateral (SSC) or Specific Cash Collateral (SCC) to settle transactions by stock or money. For detail of the operation, please refer to CCMS Terminal User Guide section 7.1 Collateral Management Services available in Client Connect (https://connect.hkex.com.hk/).

CPs may pledge Specific Stock Collateral (SSC) or Specific Cash Collateral (SCC) to cover CNS positions which will be excluded from the marks and margin requirement calculation.  If the collateral applied is at Tier P sub-portfolio, the margin requirement can be higher or lower subject to the characteristic of sub-portfolio risk profile after pledged.  For details of the relationship between Tier P sub-portfolio risk profile and margin requirement, please refer to the previous FAQ “What is the relationship between Tier P sub-portfolio risk profile and corresponding margin requirements?”.

CPs can also opt to replicate the scenario of SSC or SCC arrangement by using VaR Online to simulate the requirement.  Please note that SSC are pledged in CCMS according to corresponding stock code and settlement date while SCC are arranged in CCMS according to corresponding stock code and trade date.  All cross-day position netting should be performed after considering SSC / SCC.  For more details on covering positions and cross-day position netting, please refer to section 4.3 “Specific Stock / Cash Collateral Position Cover” and section 4.5 “Cross-day Position Netting” of the Initial Margin Calculation Guide available in Client Connect (https://connect.hkex.com.hk/). 

Specific Stock Collateral (SSC)

CPs should arrange SSC before the cut-off time at 11:00 for the intra-day Marks collateralisation and 19:00 for the day-end Marks collateralisation, while SSC inputted after 18:30 is not guaranteed on-hold on the same day.

Specific Cash Collateral (SCC)

CPs should arrange SCC before the cut-off time at 11:45 for CPI payment (subject to CPI setup) and 18:00 for DDI payment.

CP should refer to VaR Platform report, “Daily Participant Margin Multiplier Report” (DWH0081C) for their own margin multipliers and the corresponding effective dates, the flat rate margin multiplier takes effect on the next business day after the review date.

The latest Tier N margin rate and Default Fund threshold information are available in Clearing – Risk Management section in HKEX website (https://www.hkex.com.hk/Services/Clearing/Securities/Risk-Management?sc_lang=en). Any changes to the above information will be announced via circular.

HKSCC will notify those CPs who are subject to payment of Default Fund add-on requirements with payment details. Default Fund add-on to be collected will be “Default Fund add-on requirements” shown in MTM and Margin Requirement Report (RMAMR01) minus “Collateral on-hand (OCF)” shown in Special-Use Collateral Balance Report (CCMSU04).

A monthly Default Fund review will take place at the first business day of each month, subject to ad-hoc review from time to time. Circulars will be issued on the day of Default Fund review (i.e. first business day of the month); while CPs must pay their Default Fund contribution requirements, if any, by 17:45 (via DDI) on the following business day.

CPs can refer to the following reports generated after the Default Fund review and collateralisation for their requirements:

• Default Fund Requirement Report (RMADF01) – available around 10:30 via RAP
• Statement of Default Fund Contribution (CCMDF02) – available around 12:00 noon via CCASS

CPs should refer to CCASS report “Statement of Default Fund Contribution” (CCMDF02) for their actual contribution requirements, which should be paid by 17:45 (via DDI) on the following business day.

For technical details related to installing CCASS Terminal overseas, please refer to CCASS – Frequently Asked Questions at https://www.hkex.com.hk/Global/Exchange/FAQ/Securities-Market/Clearing-and-Settlement/CCASS?sc_lang=en

The TPC model enables easier access to the cash market through segregation of trading and clearing participantships.  An Exchange Participant who trades on the Stock Exchange of Hong Kong (SEHK) has the added option[1] to choose to outsource its clearing functions for Exchange Trades and/or China Connect Securities Trades to General Clearing Participant(s) who provides clearing services to Exchange Participants. Under TPC, an Exchange Participant without a clearing participantship in CCASS is referenced as a Non-Clearing Participant (NCP)[2]. An Exchange Participant who is an (i) NCP or (ii) a Clearing Participant who is not a China Connect Clearing Participant and who has entered into a Clearing Agreement with a General Clearing Participant for the clearing of its China Connect Securities Trades is referenced as a Non-China Connect Clearing Participant (NCCCP)[2].

[1] At present, an Exchange Participant, although being a CCASS Participant, can choose to outsource its clearing and settlement operations to a Settlement Agent.

[2] NCP/ NCCCP itself is not a participant type either in SEHK or HKSCC. It is a generic term for ease of classification and reference only.

No, this does not constitute a change of ownership; no additional stamp duty is therefore payable as a result of TPC activities.

For the avoidance of doubt, stamp duty on China Connect Securities Trades is directly collected by HKSCC from GCP and hence the GCP is liable for the late payment or non-payment of stamp duty related to trades in China Connect Markets.

• Capped prices will only be available for 1Mbps to 20Mbps circuits and there will be NO capped price for circuits with bandwidth of 30Mbps or above.  The new pricing arrangement is applicable to monthly tariff, installation charge and standby service fee.
• There is also change to certain one-off charge e.g. circuit bandwidth upgrade/downgrade, reconfiguration and relocation fee of specific Accredited Vendors. 
• Introduction of  Application Service Provider (ASP) circuit connection to SDNet/2 

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HKSCC will process the system maintenance job from 05:00 to 06:00 from Monday to Saturday (including public holiday) and from 00:00 to 07:00 on Sunday. During these periods, no Internet service will be available.