'Online Stock Trade During Typhoons Still Unlikely'

The Hong Kong stock exchange should stay suspended during adverse weather conditions until all retail investors in the SAR and banks become better equipped in online trading, a local investor association's chief said on Wednesday.

The chairman of the Hong Kong Institute of Investors, Ricky Tam, made this comment when asked if the exchange should change its ways to avoid suspension of activities due to adverse weather, as it happened on Tuesday.

The observatory had put up No 8 signal for most of the day as Tropical Storm Nangka swirled past the city, and critics point out that the bourse could still have operated as many transactions are now done electronically.

But Tam said while that is the way forward for the financial markets, it is not feasible in Hong Kong right now as thousands of retail investors are still not used to online trading.

Among the one million local investors, he said many of them are above 50 years old and still physically go to banks or brokerage firms for their trading.

He told RTHK’s Candice Wong that he also thinks local banks and brokerage firms do not have the comprehensive systems to do trading either.

He said these institutions and the Hong Kong stock exchange should carry out further preparation work before allowing trading during typhoons.

“These online trading systems are kind of very simple. They only can buy and sell stocks. But if you want to trade the options or you want to trade the stock futures, these systems may not support it,” Tam said.

“So if the stock exchange has to open during a typhoon period, then these kinds of brokerage house or banks…they have to improve and upgrade their whole system, otherwise some people can only trade stocks, but they cannot trade derivatives.”

For its part, Hong Kong Exchanges and Clearing said there are currently no plans to change its severe weather arrangements for the local markets, but it periodically reviews the procedures.

It added that operating markets requires balancing the needs of a diverse stakeholder group, and it has to make the safety of staff, customers and the community a priority.