Hong Kong Exchanges and Clearing Limited (HKEx) published today (Wednesday) a consultation paper on the introduction of a closing auction session for securities to invite market views and comments.
Similar to HKEx’s current pre-opening session for securities, the proposed closing auction session offers a single-price auction that matches buy and sell orders at the price that maximises transactions. This type of closing mechanism is widely used by major international exchanges.
“The proposal is aimed at improving the price discovery process for determining closing prices for all listed securities,” said HKEx Chief Operating Officer Gerald Greiner. “Other potential benefits include reducing price volatility towards the close of the trading day, enhancing market liquidity, and facilitating trading at the market close.”
The consultation paper explains features of the proposed closing auction session, how it differs from the present mechanism for calculating closing prices, and some practical considerations in respect of trading arrangements and operational changes for market participants to consider.
“We want to seek market comments on HKEx’s proposal,” Mr Greiner said.
The paper can be downloaded from the HKEx website. After the consultation period ends 7 May 2007, HKEx will review the submissions and publish consultation conclusions, including a summary of the main points made by respondents.