The HKEx will launch the "Market volatility Regulation Mechanism (Market Adjustment Mechanism)" on August 22, 2016, and will implement the market adjustment mechanism for the derivatives market in the fourth quarter of this year.

When individual applicable stocks or futures prices fluctuate sharply within a short period of time, the market adjustment mechanism will be activated to provide a five-minute cooling-off period for the market, and trading will continue within the specified price limits during the cooling-off period.

What is the market volatility regulation mechanism?

The purpose of the market volatility regulation mechanism is to avoid extreme price fluctuations caused by trading accidents, such as "flash crashes" and program errors, and to prevent systemic risk contagion between the securities market and the derivatives market. many international exchanges have implemented different forms of market adjustment mechanisms to help restore market order during volatile market conditions so as to maintain fair and orderly market operation.

How does the market adjustment mechanism of the Hong Kong market operate?

If the trading price of the stock or futures contract monitored by the market adjustment mechanism exceeds the specified percentage (the change range of individual stock according to the reference price is more than ±10%, the change range of the futures contract according to the reference price is more than ±5%), a 5-minute cooling-off period will be triggered, so that the trading will be limited to the specified price limit, and normal trading will resume later.

What stocks and futures contracts are covered by the market adjustment mechanism?

The market adjustment mechanism is only applicable to the Hang Seng Index and the Hang Seng China Enterprises Index (9606.17,-48.52,-0.50%) in the stock market, with a total of 81 stocks as of May 31, 2016. the market adjustment mechanism for the derivatives market is only applicable to the current and next month futures contracts with the Hang Seng Index or Hang Seng China Enterprises Index as the relevant index. at present, there are eight futures contracts.

What trading hours does the market adjustment mechanism apply to?

The market adjustment mechanism applies to the continuous trading session, but does not include the first 15 minutes of the morning and afternoon continuous trading session, the last 15 minutes of the afternoon continuous trading session and the post-closing futures trading session of the derivatives market.

Li Guoqiang, marketing director of Hong Kong Exchanges and Clearing, introduced the market volatility regulation mechanism to more than 40 reporters at the media workshop today, and answered reporters' questions. He said that Hong Kong Exchanges and Clearing's market adjustment mechanism has found a balance between maintaining a fair and orderly market order and reducing market intervention. Statistics from more than nine years of return test data show that the stock market has not triggered a cooling-off period most of the time, and the derivatives market has only triggered two cooling-off periods during the return test statistics period.