Currently, HKEX offers self-match prevention (“SMP”) service to derivatives market (details refer to the link) and it is an optional and free-of charge service.  Should Exchange Participants (“EPs”) enable SMP for specific HKATS Username(s), orders from such HKATS Username(s) will not be matched with other orders within the same HKATS Customer Code. 

An illustration as follows:

Aggressive orders instead of resting orders will be deleted by the system before the point of matching.

Currently, the existing SMP can only delete orders within same HKATS Customer Code, it cannot delete orders across HKATS Customer Code and/ or across Exchange Participants (“EPs”).

The existing SMP model at HKEX, based on HKATS Username (“HKATS Username-based SMP”) (details in link), will remain in service and unchanged in feature (i.e. without the enhanced features) after the introduction of the new SMP model (“ID-based SMP”).

Meanwhile, ID-based SMP is targeted to be provided in derivatives market in Q2 2024 subject to market readiness and regulatory approval.

Key features of ID-based SMP includes:

1. Introduction of SMP ID as identifier for triggering SMP: Under the new SMP model, SMP will be based on an identifier (“SMP ID”) assigned by the Exchange to cancel potential self-matched orders[1]. During continuous trading session, a buy order and a sell order with the same SMP ID will be prevented from executing against each other, and either one side of orders will be cancelled according to the pre-specified cancellation method of the respective SMP ID.

   EPs and/or their clients who apply for the SMP model will be assigned a designated and unique SMP ID by the Exchange upon successful registration.  SMP users can tag their assigned SMP IDs to their own orders to prevent self-matching.  The Exchange will announce the details of SMP registration in due course.

2. Cancel aggressive order (“CA”) and cancel passive order (“CP”) as order cancellation method: Each SMP ID must be specified with either one of the two order cancellation methods.  Upon a potential match between two orders bearing the same SMP ID with a designated cancellation method:
   a) the incoming order will be cancelled if CA is chosen; or 
   b) the resting orders will be cancelled if CP is chosen.
   
   
3. Multi-broker model: This new SMP model would prevent self-matching of orders tagged with the same SMP ID via different EPs.

*[1] including all order types (with the exception of combo/bait order against outright) during continuous trading session (day and after-hours trading session)

Currently under HKATS Username-based SMP, there is only one SMP cancellation method, i.e. cancel aggressive (“CA”). No additional cancellation method will be introduced to HKATS Username-based SMP after the enhancements.

Illustration refers as follows:

For ID-based SMP, there will be two types of cancellation methods, i.e.  cancel aggressive (“CA”) and cancel passive (“CP”) are available to allow market participants (i.e. EP and/or their clients) to choose how orders are handled in the event of a self-match. Upon a potential match between two orders bearing the same SMP ID with a designated cancellation method:

a) the incoming order will be cancelled if CA is chosen; or

b) the resting order will be cancelled if CP is chosen.

Illustration refers as follows:

Either HKATS Username-based SMP or ID-based SMP can be used under the same HKATS Customer Code.  However, both models cannot be enabled at the same time. 

In ID-based SMP, SMP ID is a unique identifier allocated by the Exchange for market participants (i.e. EP and/or their clients) to tag in their orders for using the SMP model.  Each SMP ID must be specified with either one of the cancellation methods during SMP ID application.  The cancellation method is allowed to be changed upon request from market participants of EPs and the Exchange’s approval.

All products in the derivatives market are available for both SMP models (i.e. HKATS Username-based SMP and ID-based SMP).

Both SMP models (i.e. HKATS Username-based SMP and ID-based SMP) are applicable in continuous trading session including day trading session and after-hours trading session. SMP is not available in pre-market opening period.

Yes. SMP will take priority over the trigger of VCM. 

Upon enhancements, all order types (with the exception of combo/bait order against outright) during continuous trading session (day and after-hours trading session) are subject to SMP in both SMP models (i,e, HKATS Username-based SMP and ID-based SMP).

No, all orders are processed by the matching engine according to the price-time priority. SMP will cancel either side of the orders of a potential self trade according to the selected cancellation method.

Yes. SMP is applicable to any outstanding orders in Continuous Trading Session, as long as the orders are tagged with SMP ID. 

Yes, there will be an order cancellation message sent to the EP with the reject reason.

No, the cancellation reason due to SMP or information related to SMP will not be disseminated to the market.

There will be no impact to order priority for orders with SMP ID. All orders are processed by the matching engine according to the time sequence upon arrival.

Yes. SMP ID can be amended / removed after order submission. However, it will be considered as a new order and its original order priority in order book will be lost. 

Further details will be announced in due course.

There is a registration process required to allow the same SMP ID tagged through different EPs. Further details will be announced in due course.