By Kacee Ting Wong
To maintain the competitive edge of Hong Kong’s stock market, Financial Secretary Paul Chan Mo-po announced earlier that the Hong Kong Exchanges and Clearing Ltd (HKEX) will study proposals to explore arrangements for maintaining operation of the market during inclement weather so as to dovetail with the global market trend. On July 17, the stock market was closed because a No 8 typhoon warning signal was hoisted. The disruption brought about by Typhoon Talim also affected Northbound Stock Connect trading and the stock debut of New Media Lab. It’s imperative that the HKEX bend flexibly with the global winds of change and allow stock trading to remain normal during typhoons and rainstorms.
The proposal to explore arrangements for maintaining normal market operation under inclement weather was first raised by HKEX CEO Nicolas Aguzin soon after he assumed office in 2021. Although the proposal has not attracted much attention, Aguzin has consistently tried to keep Hong Kong’s stock market on the same page as other major stock markets around the world. It’s worth noting that the global finance industry adjusted to allow for remote working during the COVID-19 pandemic.
Typhoon-driven disruption to stock trading is an alien concept in rival financial hub Singapore. The fact that the Singapore Exchange (SGX) has never halted stock trading because of weather-related events is a strong reason for HKEX to speed up a review of its stock market operation under inclement weather. We should keep our finger on the pulse of financial market players, many of whom believe Singapore has overtaken Hong Kong as Asia’s top financial center.
Equally of concern is the fact that the HKEX has listed 15 market holidays in 2023. The SGX, on the other hand, has only 11 holidays in 2023. A mindset shift is needed to ensure that the willpower to sharpen its competitive edge is deeply implanted in the subconsciousness of the HKEX.
According to Aguzin, the HKEX has to balance the interests of the people and the security and safety of the people (Hong Kong’s Stock Market Halts Trade When a Typhoon Warning Is Issued — The CEO Says That May Change, CNBC, Nov 2, 2022). At present, there is no law relating to work arrangements in case of adverse weather in Hong Kong. Although the Labour Department’s Code of Practice during Typhoons and Rainstorms provides practical guidelines for employers and employees, it is not legally binding and does not mention work-from-home arrangements in case of adverse weather.
In spite of the fact that most trading orders are now received and executed electronically, some staff members of brokerages may still be required to return to the office during inclement weather. Disputes between employers and employees are inevitable because a “bad-weather holiday” is often regarded as a norm in the local labor market. Besides, traffic disruptions will add new complexities to the complicated issue of special working arrangements during inclement weather.
To remedy the above defects, employers and employees should negotiate a feasible deal to accommodate the proposed trade-normalizing arrangement under adverse weather. A move to maintain normal stock trading during severe weather conditions will most probably affect the operations of small stock brokerages. With limited resources, small brokerages will have no option but to stretch themselves to the limit in order to maintain trading, settlement and delivery in adverse weather conditions. It’s also expected that labor-insurance costs will rise.
If, as is more likely, smaller brokers still fail to settle on time, special arrangements should be made to ease their concerns. For example, the HKEX should allow smaller brokerages to delay settlement and delivery even as trading is kept open. Although the city’s 521 smaller brokerages currently handle less than 5 percent of the trading volume on the exchange, we still need to take care of the interests of the small investors by facilitating the smooth operation of smaller brokerages, which mainly serve small investors.
The advantages of maintaining normal trading during bad weather outweigh the disadvantages. In addition to the pressing need to dovetail with the global trend, we must consider the estimated loss of HK$5 billion ($639 million) a day on average whenever the city shuts down its stock market (The Standard, July 18, 2023). More importantly, typhoon-driven disruption to stock trading may make the market more volatile and increase the potential risks for investors.
While stock trading was halted on July 17, the electronic trading platform of the Chinese Gold and Silver Exchange (CGSE) remained open for a full trading day in spite of the typhoon. Like the stock market, the open outcry trading was closed by the CGSE on that date. The CGSE, which was established in 1910, is among the few exchanges in the world that have both open outcry and an electronic trading platform.
To conclude, maintaining normal stock-market operation during severe weather is vital to the competitiveness of Hong Kong’s securities market, especially when extreme-weather days are rising because of climate change. The SGX, a competitor of HKEX, has maintained normal trading during adverse weather. There is no reason why the HKEX couldn’t.
The author is a barrister, part-time researcher of Shenzhen University Hong Kong and Macao Basic Law Research Center, and chairman of Chinese Dream Think Tank.
The views do not necessarily reflect those of China Daily.
【CDTT Newspaper Article】Kacee Ting：SAR needs normal stock trading in severe weather (China Daily HK Edition, 21 Aug 2023)
Chinese Dream Think Tank is a non-profit Hong Kong-based organization working with skilled volunteers, experts and professionals who are passionate about telling the China story well.
This article is reproduced by Kwun Media with the consent of China Daily.
「港交所」前行政總裁歐冠昇先生(Nicolas Aguzin)於2021年履新不久，首次提出探討在惡劣天氣下股票交易市場運作正常化安排的建議。雖然該提案並未引起太多關注，但歐先生一直嘗試將「港交所」與全球其他主要股市保持同步。大家注意，相關建議可行，在 COVID-19大流行爆發期間，全球金融業已渡過遠程工作模式適應期。
一個不爭的事實是「港交所」停市一天將損失約50億港元(註6)。因「打風放假」所產生的股票交易中斷可能會使金融市場更加波動，增加投資者所要承受的潛在風險。因此，在惡劣天氣下為常態化交易開綠燈是利遠遠大於弊。「港交所」與全球市場趨勢中步有其迫切性。還有的是成立於1910年的「金銀業貿易場」(Chinese Gold and Silver Exchange)(CGSE)(註7)，它是現時世界少有仍然保留公開喊價形式交易產品的平台與電子形式交易平台。雖然特區股票交易於7月17日停止，CGSE電子交易平台仍在風暴中依然全天運作。
註 1: 陳茂波《2023-24年財政年度 政府財政預算案》的演辭 2023年2月22星期三 at §91 available at: https://www.budget.gov.hk/2023/chi/pdf/c_budget_speech_2023-24.pdf
註 2: 唐太宗李世民《賜蕭瑀》available at: https://baike.baidu.hk/item/賜蕭瑀/6758871
註 3: SGX Trading Hours and Market Holidays 2023 available at: https://www.tradinghours.com/markets/sgx#regualr-trading-schedule
註 4: Jihye Lee「Hong Kong’s stock market halts trade when a typhoon warning is issued – the CEO says that may change
Asia Market in CNBC 02.11.2022 「We have to balance the interest of the people, the security of the people, safety of the people,
available at: https://www.cnbc.com/amp/2022/11/03/hkex-ceo-discusses-trading-halt-rules-as-typhoon-warning-ends-session-early.html
註 5: 勞工處《颱風及暴雨情況下工作守則》available at: https://www.labour.gov.hk/tc/public/pdf/wcp/Rainstorm.pdf
註 6: Staff reporter and Bloomberg「Stormy weather washes away $5 billion a day
Money glitz 18.07.2023 available at: https://www.thestandard.com.hk/section-news/section/50021565/254304/Stormy-weather-washes-away-$5-billion-a-day
註 7: 維基百科「金銀業貿易場」available at: https://zh.m.wikipedia.org/wiki/金銀業貿易場