The protection mechanism is gone! The Hong Kong Stock Exchange suspended the market fluctuation adjustment mechanism of Hang Seng Index futures products.
Hong Kong Futures Exchange Limited (HKFE) is a subsidiary of The Stock Exchange of Hong Kong (00388). HK), announced on Wednesday morning (65438+1October 26th) that due to software problems of external suppliers, HKFE will suspend the market fluctuation adjustment mechanism of Hang Seng Index Futures, Hang Seng China Enterprises Index Futures, Hang Seng Technology Index Futures, Small Hang Seng Index Futures and Small Hang Seng China Enterprises Index Futures for the current month and next month until further notice.
The futures exchange said that it is working with suppliers to solve the problem and will issue further announcements in due course. The market fluctuation adjustment mechanism of the spot market of the Hong Kong Stock Exchange is not affected and operates as usual.
Here is a brief introduction to the market regulation mechanism of the Hong Kong Stock Exchange, which was implemented on August 22, 2006. Market regulation mechanism can prevent the occurrence of major trading accidents such as extreme price fluctuation with chain effect and flash crash caused by wrong trading, and alleviate the systemic risks brought by extreme price fluctuation in securities and derivatives markets.
This mechanism also helps to remind the market to allow participants to re-evaluate their strategies and positions within a short cooling-off period and make investment decisions. This mechanism will not suspend trading, nor is it used to limit stock price fluctuations. It is also different from the daily price limit system that limits the daily price range of securities trading in some markets.
Simply put, the five-minute plus or minus 10% protection mechanism of Hang Seng Index futures products stops.
The design of market regulation mechanism includes special measures to minimize market intervention. For example, it applies to a single product rather than the whole market; It is suggested to adopt dynamic reference price instead of static reference price; Setting the threshold of the trigger point should not trigger the market regulation mechanism too frequently (the trigger point of the securities market should be set to 10%, 15% or 20% respectively according to the stock group); The monitoring of the market regulation mechanism of Hong Kong stocks is applicable to the continuous trading hours, except for the first 15 minutes of the morning market and the afternoon market, and the last 20 minutes of the afternoon market (or the continuous trading hours of the morning market for half a trading day).
HKEx's market regulation mechanism is that if the price deviates from a predetermined percentage within a certain period of time, it will trigger a cooling-off period of 5 minutes, so as to provide market participants with time to re-examine their strategies when necessary. This will also help to re-establish an orderly market in the case of market fluctuations.
In this mode, if the prices of individual products fluctuate greatly, the cooling-off period will be triggered. The following figure illustrates the operation of the market regulation mechanism triggered by applicable products, with 10% as the trigger threshold and the price limit in the cooling-off period as an example.
In the securities market, if the price of the market-adjusted securities deviates from the final trading price by more than 10% five minutes ago, a five-minute cooling-off period will begin.
During the cooling-off period, trading is allowed within the price limit. After the cooling-off period, unrestricted normal trading will be resumed.
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