On the evening of November 13, Hong Kong Exchanges and Clearing Limited (hereinafter referred to as "HKEX") announced that due to the Hong Kong Observatory hoisting the No. 8 typhoon signal at 11:10 PM, the trading arrangements for inclement weather will take effect. All markets under HKEX, including the post-market trading sessions of the derivatives market, will continue to operate fully.

This is the first time the new rule of "trading continues during typhoons" has been triggered since HKEX decided to maintain trading arrangements during inclement weather on September 23 this year.

It is understood that in the past, HKEX would close the market or suspend trading when encountering extreme weather such as typhoons and heavy rain. For example, during Typhoon "Max" on September 6 this year, Hong Kong suspended several public services, banks ceased operations for the entire day, and the Hong Kong stock market was closed that day.

The reason behind this mainly relates to Hong Kong's response mechanism for inclement weather. Hong Kong is a region prone to typhoons and heavy rain, so a response mechanism for inclement weather has been established a long time ago. Generally speaking, during adverse weather, the government advises citizens to stay indoors and minimize outdoor activities, while employers adopt more flexible work arrangements and do not require employees to work in the office. Hong Kong is affected by inclement weather several times a year; the severity of these adverse weather conditions varies, but during the most severe times (such as when a No. 8 or higher gale warning or black rainstorm warning is in effect), government services are suspended, most public transport is halted, schools close, offices and shops cease operations, and the financial market is closed. The previous suspension arrangements of HKEX were mainly to ensure the safety of employees, market practitioners, and investors.

However, with the development of fintech and the increasing demand for continuous trading in the market, many exchanges around the world can maintain operations under adverse weather conditions while ensuring personnel safety. To maintain its international competitiveness, the Hong Kong financial market also needs to keep pace with the times and align with international practices; therefore, HKEX has promoted this reform.

Maintaining trading arrangements under inclement weather will ensure that local, mainland, and international investors can respond to global market developments within Hong Kong trading hours, including during index adjustment days, as usual for trading and risk management.

Bonnie Chan Yi-Ting, CEO of HKEX Group, previously stated: "The Hong Kong market will open and continue operations under inclement weather; this is a key measure to ensure that we can provide services to regional and international investors during trading hours under any weather. Implementing trading arrangements during inclement weather is precisely the important commitment of HKEX to develop the market and enhance Hong Kong's position as an international financial center."

A previous announcement by hkex indicated that after completing testing and market rehearsal phases, participants holding over 99.9% of the securities market share and all participants in the derivatives market have submitted declarations to hkex, indicating that they are fully prepared to maintain operation on severe weather days after September 23, 2024. hkex has noted that a small number of securities market participants and their clearing participants are not yet fully prepared for operation on severe weather days. These exchange participants and clearing participants represent less than 0.1% of the securities market share.

In addition, as of September 10 of this year, hkex's announcement shows that Wan Kwang Securities Limited, Huan Yi Securities Limited, Sunshine Capital Securities Limited, and Tai Yang Securities Limited have not yet fully prepared for operation on severe weather days.

Editor/Somer