Market Turnover
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Volatility Control Mechanism (VCM)

Volatility Control Mechanism (VCM) is designed to protect the market from disorderliness caused by extreme price volatility. VCM for the derivatives market covers the spot month and next calendar month contracts in the Hang Seng Index (HSI), Mini-Hang Seng Index (MHI), H-shares Index (HHI) and Mini H-shares Index (MCH) futures markets (total 8 contracts).

When VCM is in effect, a five-minute cooling-off period will be triggered if the price deviates for more than 5% from the last traded price five minutes ago. This provides a window allowing market participants to reassess their strategies, if necessary.  It also helps to re-establish an orderly market during volatile market situations. After the cooling-off period, trading will resume to normal with VCM monitoring. In other words, multiple triggers per trading session is allowed.

 

Enhancement on Volatility Control Mechanism

Circular


Updated 12 Apr 2021