Hong Kong lenders ready for e-commerce, check clearing under new stock trading policy during typhoons, says HKAB

Hong Kong lenders ready for e-commerce, check clearing under new stock trading policy during typhoons, says HKAB

“Through sustained investment in technology and robust infrastructure, Hong Kong’s banking community is well-prepared for remote working and well-positioned to meet customers’ business needs,” the statement said.

Stock exchange operator Hong Kong Exchanges and Clearing (HKEX) will allow trading in stocks and derivatives to continue during typhoons and torrential rains from September 23, chief executive John Lee Ka-chiu said on Tuesday.

A general view of the Hong Kong Exchanges and Clearing (HKEX) office in Central. Photo: Jelly Tse.

The move will end the 70-year-old practice of halting trading in the stock and futures markets or shutting them down completely when the observatory issues a Typhoon Signal No. 8 or black rain warning.

HKEX will require all brokers to ensure their systems are prepared to support their traders and staff members working from home in the event of extreme weather conditions. They will also have to allow investors to trade online.

Katerine Kou, president of the Hong Kong Securities Association, said all brokers will, in the coming months, need to discuss support for digital banking and check clearing procedures with lenders.

“All of the approximately 1,000 bank branches will close during typhoons, even as stock and derivatives markets continue to trade under the new climate policy,” Kou said. “It is important for banks to ensure that Internet banking and check clearing can run smoothly. »

Banks will allocate resources to ensure the continued operation of internet and telephone banking services during bad weather days, the HKAB spokesperson said.

Banks will also be prepared for the new settlement agreement for check payments, the spokesperson added.

Under existing arrangements, no checks are cleared for the entire day when a Typhoon No. 8 signal or black storm warning is activated, with all checks deposited in banks on the business day preceding the typhoon being cleared. that the day after storm signals were lowered to No. 3 or canceled.

People walk along the promenade overlooking Victoria Harbor on a rainy day in Tsim Sha Tsui. Photo: Jelly Tse

Under the new provisions, settlement of checks cashed before a bad weather day will not be interrupted and they will be settled on the day of the typhoon, when the stock and futures markets are open.

“The new severe weather trading arrangements align Hong Kong’s trading mechanisms with global standards and improve the overall competitiveness of Hong Kong’s financial markets,” the HKAB spokesperson said.

“Although internet banking and electronic platforms are popular channels for stock trading in Hong Kong, the new arrangement may encourage some customers to use these platforms more.”

Wilson Chan Fung-cheung, associate director of City University’s master of business administration program, said the new move would be significant in Hong’s role as an international financial center.

“Many international investors do business in Hong Kong and would like to invest even on the day of the typhoon. Hong Kong’s banking sector must support such a change,” he said.

“The change will also improve payments by check and other electronic payment systems in Hong Kong, which will strengthen Hong Kong’s status as an international financial center.”

Chan, who was a forex trader for three decades before becoming an academic, said many employees in currency trading units are used to working around the clock and during typhoons.

“Lenders should have no difficulty organizing their systems and staff to support the new weather rule.”