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HKEX Successfully Launches Closing Auction Session for its Securities Market

Market Operations
25 Jul 2016

Hong Kong Exchanges and Clearing Limited (HKEX) today (Monday) successfully introduced its Closing Auction Session (CAS) for securities after extensive preparations and testing conducted in conjunction with market participants. There were 290 Exchange Participants that took part and 282 stocks were traded in the CAS on its first day, contributing 2.2 per cent of the full-day turnover (more trading statistics can be found in the table below).

Closing auction is a trading mechanism commonly used in securities markets around the world to allow execution at securities' closing prices. During a closing auction, market participants may input buy and sell orders, with the price that most volume can be traded at forming the closing price. All orders will then be executed at that price.

HKEX's CAS was designed after an extensive period of research on overseas practices, consultation with market participants and consideration of the diverse needs and concerns of the various segments of the market.

For CAS securities, the market close is between 4:08 pm and 4:10 pm on a normal trading day; for other securities, it is 4:00 pm on a normal trading day. In parallel, the closing time for the trading of stock index futures and options, currency futures and commodities futures in HKEX's derivatives market has been extended from 4:15 pm to 4:30 pm on a normal trading day, except on the last trading day of the month.

To curb excessive price movements during the CAS, there is a two-stage price limit, initially at ±5 per cent from the reference price* and then between the best bid and best ask. Further details of the CAS are on the HKEX website.

"We consulted the market in January of last year and concluded in July of last year to introduce a CAS based on positive market feedback. We started actively engaging the market right after we announced our plans for our CAS, to ensure market participants were ready, and we appreciate the collective effort over the past 12 months that made today's launch a reality and a success," said Roger Lee, HKEX's Head of Markets. "With the CAS, we can meet market demand for execution at securities' closing prices, and our approach to the market close is in line with the approaches of other leading exchanges."

Key Statistics from Today's CAS

Number of Exchange Participants that participated: 290
Number of securities traded/number of CAS securities: 282/528
Turnover: $1.1 billion
CAS turnover as a percentage of today's market turnover: 2.2 per cent
CAS turnover as a percentage of today's turnover of CAS securities: 3.6 per cent

* The reference price is determined by taking the median of five nominal prices in the last minute of the Continuous Trading Session (3:59 pm to 4:00 pm).


Updated 25 Jul 2016