Thursday July 21 2016
News Source: Global Exchanges
Focus: Trading Rules
Type: General
Country: China
Link: http://english.sse.com.cn/aboutsse/news/newsrelease/c/4145802.shtml
Shanghai Stock Exchange (SSE) has officially revised and released the “SSE Measures for Piloting Shanghai-Hong Kong Stock Connect” (the “Measures”).
Background
According to the “Amendment of Implementing Time Interval of Closing Auction in the Securities Market” released by the Stock Exchange of Hong Kong Ltd. (SEHK) on June 27, 2016, the SEHK will add the time interval of closing auction after the continuous trading session from July 25, 2016, which will apply to the securities in the prescribed scope. To match up the arrangement of relevant business, the SSE has revised the corresponding articles in the “Measures”.
Main Features of the SEHK’s Closing Auction Mechanism
The closing auction launched by the SEHK adjusted the existing closing trading system by adding the time interval of closing auction after the continuous trading and adopting the call auction. Price limit for orders has been set up in the time interval of closing auction so that orders not conforming to the price limit will be cancelled or refused. The closing auction initially only applies to the securities in the prescribed scope, and will gradually be improved as time progresses.
Revised Contents in the “Measures”
Certain aspects in the “Measures” have been revised, and the revised contents summarised in the following three aspects:
(1) Adding the time interval of closing auction in the trading time of the Hong Kong Stock Connect trading days according to the SEHK’s revision to trading rules;
(2) Making clear that the order type that investors of Hong Kong Stock Connect can adopt in the time interval of closing auction is at-auction limit order;
(3) Making clear the intraday quota control mechanism in the time interval of closing auction, and stipulating that the follow-up buying orders will be neither accepted nor recovered on the day when the intraday quota is used up in the time interval of closing auction.
Next Steps
The SEHK is planning to launch an adjustment mechanism for market fluctuations in 2016, despite the rules having not been officially released.
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