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Banking & finance
Business

Hong Kong a step closer to keeping stock and derivatives markets open during typhoons, issues consultation paper on ending shutdowns from July

  • Public consultation paper seeks consensus on ending decades-old practice of shutting down stock and derivatives markets in extreme weather
  • Hong Kong remains the only major global market to halt trading during inclement weather, even though trading in the city has been fully electronic since 2017

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Hong Kong’s Central business district in the aftermath of super typhoon Saola in September. Since 2018, tropical cyclones and severe rainstorms have forced Hong Kong’s stock and derivatives markets to shut down 11 times. Photo: Dickson Lee
Enoch Yiu

Hong Kong moved a step closer to keeping the local stock and derivatives markets open during typhoons from as early as July next year, after issuing a public consultation paper to gather feedback from institutions and investors about ending such shutdowns.

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Bourse operator Hong Kong Exchanges and Clearing (HKEX) has proposed keeping trading going during such adverse weather, a move that could enhance its revenue as well as bolster the government’s tax collections, according to the document posted on its website on Thursday. Barring technical hiccups, the plan could come into force by July, before typhoon season starts in the summer.

The exchange is currently bound to delay trading or shut the market entirely when the Hong Kong Observatory issues Typhoon signal No. 8 or higher, or raises a black rainstorm alert. The rules were written into its business operations in the 1950s.

“Hong Kong’s status as a leading international financial centre has grown with increased participation by international and mainland [Chinese] investors,” the HKEX consultation paper said.

“There is a pressing need to consider a change to existing severe weather arrangements in Hong Kong to enhance Hong Kong’s competitiveness as a trading and risk-management venue and international financial centre.”

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Since 2018, tropical cyclones and severe rainstorms have forced the market to shut down 11 times. This year alone, HKEX has had to delay or shut the markets due to the typhoons Talim, Saola and Koinu, as well as other black rainstorms.
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