Hong Kong Exchanges and Clearing Limited (HKEx) is committed to ensuring smooth market operations and keeping the public informed on major market developments.

The following is a summary of the investigation of the interruption in futures and options trading yesterday (Tuesday, 28 May), the actions taken and the actions to be taken. It is regrettable that yesterday's incident may have resulted in inconvenience.

Description of the Incident

Futures and options trading was interrupted at 3:12pm yesterday due to a power failure. The UPS (Uninterrupted Power Supply) failed to immediately takeover. Conversion to the alternative backup data centre took place at 4:00pm. Trading of EFN Futures, HIBOR Futures and International Stock Futures and Options resumed at 4:30pm and these markets closed at their normal times.

The preliminary investigation of yesterday's incident revealed that one unit in the UPS failed to takeover because its batteries were dead. The other unit took over briefly then failed due to a bad contact between the unit and its batteries.

By design, the UPS can run on either unit and the takeover would have been effective if either unit had functioned properly. In short, there was a double fault.

Background

HKEx had engaged a supplier and maintenance service provider to upgrade the UPS in August last year. An independent electrical and mechanical (E&M) consultant confirmed the installation and acceptance test results were satisfactory. Under HKEx's agreement with its UPS supplier and maintenance service provider, the firm is to conduct a thorough monthly maintenance service of the UPS system, including checking and recording battery voltage, battery charging current and observing any significant fluctuation.

The last routine monthly maintenance check was conducted on 29 April this year and the service records showed no problems were recorded.

The UPS was last activated on 20 May this year due to a fluctuation in the main power supply and the UPS takeover was successful. Following that incident, the UPS alarm was reset by the UPS supplier according to normal procedures.

Remedial Actions Taken

In the evening of 28 May, the derivatives data centre was shut down in an orderly manner for power and UPS diagnosis and maintenance. New batteries were installed in the UPS unit that had the dead batteries, and the battery contact in the other unit was restored and checked by the UPS supplier.

The two units were tested under the supervision of a certified E&M consultant. The test involved a simulated interruption in the main power supply and the results were satisfactory.

The backup data centre is currently being used for HKATS market operations and the primary data centre is serving as the backup.

Actions to be Taken

The UPS supplier will submit an action plan to HKEx by this Friday on the weekend work and tests that should be taken to ensure the system functions properly in the future. In addition, the UPS supplier will submit an investigation report to HKEx next week.

HKEx has commissioned an independent E&M consultant to review the UPS supplier's action plan and to advise on the UPS supplier's likely performance and reliability in the future.

HKEx will consider introducing future improvements in light of the independent E&M consultant's recommendations.

HKEx will report to the Securities and Futures Commission after reviewing the reports from the UPS supplier and the independent E&M consultant.