Hong Kong Exchanges & Clearing (HKEX) has confirmed plans to expand its closing auction session to cover all equities and funds traded on its stock exchange.
The exchange operator said that as of 8 October this year, the closing auction session will cover equities including depository receipts, investment companies, preference shares and stapled securities, as well as funds including exchange-traded funds and real estate investment trusts.
The expansion of HKEX’s closing auction session, which allows execution at closing prices, will increase the number of securities covered by the closing auction session from around 700 to more than 2,600.
“Since its launch three years ago, the closing auction session has recorded robust volumes, helping meet the diverse trading needs of investors in our market,” said Wilfred Yiu, HKEX head of markets. “The expansion of the closing auction session to all equities and funds will further improve trading liquidity at close, simplify trading operations of market participants, and standardise closing times for equities.”
Trading turnover during closing auction sessions at HKEX has increased from 6% at its launch in 2016 to more than 8% of full day turnover during the past 12 months.
HKEX added that the new securities will use the existing closing auction session model with a price limit of 5% and up to 10 minutes to complete daily trades during the session. Structured products, leveraged and inverse products, equity warrants, rights and debt securities will not be included in closing auction session.
Last month, the Singapore Exchange (SGX) introduced a ‘trade at close’ session, allowing 10 minutes for market participants to execute at the closing auction price immediately after the closing auction.
SGX said that investors and brokers who desire price certainty or who are looking to fill an order that was not completed during the closing auction will benefit from the trade at close trading session.