The move will scrap the 70-year-old practice of halting trading on the stock and futures markets or shutting them entirely when the observatory issues a No 8 typhoon signal or black rainstorm alert.
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The history of deadly Hong Kong typhoons that caused widespread devastation
The history of deadly Hong Kong typhoons that caused widespread devastation
HKEX will require all brokers to ensure their systems are ready to support their traders and staff members working from home during severe weather. They will also need to allow investors to trade online.
“Most of the brokers allowed their traders and staff to work from home during the Covid-19 so they would not have a problem switching to remote trading during the typhoons,” Chan said.
“Hong Kong’s 600 stockbrokers are committed to working together with the regulators and the government to enhance the competitiveness of the local market,” Chan said. “Hong Kong is among the few international markets that suspend trading during bad weather. We have to catch up.”
Katerine Kou, chairwoman of the Hong Kong Securities Association, said HKEX has agreed to offer a three month grace period to help the small brokers prepare for the new policy, which she believes to be important.
HKEX deputy CEO Wilfred Yiu Ka-yan said that from September 23 until the end of the year, the exchange will settle any outstanding payment obligations for the small brokers during trading day storms. These brokers will need to first apply to the exchange to get that support, and they will also need to upgrade their systems to comply with the new rules from January.
“Brokers and their bankers will need to work out how to cope with some technical problems to prepare for the new rules. There may be difficulties, but they can be solved,” Kou said.
“I believe 90 per cent of the roughly 600 brokers are ready for the change – it is only about 50 to 60 smaller players that do not yet have online facilities.”
She said all stockbrokers in the coming months will need to talk to lenders about digital banking support for trading during typhoons because all bank branches will shut down.
The Hong Kong Association of Banks (HKAB), the industry body for all local lenders, said banks is ready to support the trading arrangement during typhoons and rainstorms.
“Thanks to sustained investments in technology and robust infrastructure, Hong Kong’s banking community is well prepared for remote work and well placed to meet customers’ trading needs,” a spokesman for the HKAB said in a statement.
The HKAB will continue to collaborate closely with HKEX and other stakeholders to ensure the smooth implementation of the new arrangements, the spokesman said.