That article is about Introduction: Hong Kong Stock Exchange. Asia’s largest exchange (in terms of the market capitalization) happens to be Tokyo stock exchange. The Shanghai stock exchange follows it and the Hong Kong stock exchange occupies the third slot with a market capitalization of US$ 2.7 trillion.
The exchange lists 1,241 companies and the Hong Kong Exchanges and Clearing Services owns and operates the exchange. The HKEX has close associations with the Securities and Futures Commission (SFC). The commission formulates most of the trading rules and various other types of regulations practiced in the exchange. Certain interesting aspects of this exchange will be highlighted in the remaining passages.
Trading in the HKEX occurs during the weekdays. A classification of the trading hours exists. The pre-opening auction starts from 09:30 to 09:50. The morning session begins at 10:00 and continues until 12:30pm. The afternoon trading sessions are from 14:30 to 16:00. A 10-minute after hour trading session also occurs from 16:00 to 16:10.
The trading community generally dislikes this practice as there have been widespread reports of the exertion of shrewd influences to alter the stock prices. Unlike the other stock exchanges where the closing price is determined once at the 11th hour, the HKEX uses price snap shots every 15 seconds from 15:59 to 16:00. The exchange then calculates the closing price as a median of these five snapshots.
Disregarding the effective practices of the TSE and the SSE, the HKEX maintains a highly efficient electronic trading platform. With the aid of this platform (named the Automatic Order Matching and Execution System), traders and stockbrokers can execute orders remotely via the internet. The initial computerization of the trading machines took place in 1986.
There was a revision in the services by 1993. By 2000, almost all the exchange machinery connected to the high-speed data networks consisted of third generation iterations. There are certain peculiarities for the trading practices of the HKEX. The extremely low price factor of $4.00 per share is one of the notable characteristics.
The conventional stock exchanges will deal with even board lot sizes only. Usually the lot size is 100 shares. However, there exists an odd lot market in HKEX. Interested traders and brokers can now trade using a lot size of their choice. One can realize the trend in the online trading platform of HKEX. The broker will always list the board size alongside. While most of the markets are not comfortable while dealing with the odd lot market, the HKEX promotes such trading practices.
The close in price in HKEX is determined according to a certain preset number of ticks (of the existing value of the share). The broker or the agency, which he represents, will fix stringier conditions while deciding the number of ticks. The practice has helped the traders to maintain the integrity of the trading sessions.
It has deterred the various kinds of trading malpractice that was the norm in the exchange. Disasters are quite normal in this stock exchange. The financial crisis during the years 2007 to 2010 had led to reduced market capitalization in the exchange.