Open Letter to the Financial Affairs Committee of the Legislative Council Concerning the Hong Kong Stock Exchange's Consultation on Trading Continuity During Severe Weather Conditions
Release Date: 2024-01-22
Legislative Council of the Hong Kong Special Administrative Region of the People's Republic of China
Email: panel_fa@legco.gov.hk
To: Hon. Lee Wai-hung Robert, Chairman, Financial Affairs Panel
cc: Hon. Kwok Wai-keung Aaron
Date: January 22, 2024
Subject: Feedback on HKEX's Consultation Paper on Severe Weather Trading of Hong Kong Securities and Derivatives Markets
On November 30, 2023, Hong Kong Exchanges and Clearing Limited (HKEX) released a consultation paper concerning the continuation of trading activities during severe weather conditions. As stakeholders in Hong Kong’s financial and securities markets, we support initiatives that enhance the industry and the region. However, the consultation seems rushed and incomplete. Our primary concerns are outlined below:
Employee Safety in Severe Conditions
The proposal's core concern should be the safety of employees and investors. We advocate for electronic and remote operations during severe weather, advising against physical business operations. The consultation notes that during the pandemic, industries gained experience in remote work. However, pandemic work-from-home practices were diverse, often involving rotational work and not solely remote operations. Emergency management differs from weather-related disruptions. Ensuring normal trading during severe weather requires collaboration across various sectors, including banking, securities, and public safety services, which incurs societal costs and impacts employee safety.
Revising the "Business Day" Concept
HKEX suggests maintaining typical listing activities during severe weather, implicating the banking sector's role in financial transactions. This may necessitate redefining "business day," a term crucial for employment contracts and planning. It remains uncertain whether HKEX has engaged in comprehensive consultations with the banking sector and governmental bodies on this significant issue.
Concentration and Cost Implications
Implementing robust cybersecurity measures demands significant investment, a burden primarily manageable by large financial institutions. Recent market reports highlight the dominance of Groups A and B brokers, who handle the majority of trading volumes. Severe weather trading arrangements may exacerbate this trend, sidelining smaller brokers and increasing market concentration, thereby posing systemic risks.
Accountability Concerns
With employees expected to work remotely during severe weather, questions about network security and accountability arise. If a cybersecurity issue occurs, who bears responsibility—the individual or the institution? Furthermore, if employees must travel to address system issues and are unable due to weather, who is accountable for any resulting losses? The consultation lacks detailed analysis on these operational challenges.
In conclusion, the proposal to maintain trading during severe weather has widespread implications beyond the securities industry. We urge HKEX to engage with the Legislative Council and/or the Financial Affairs Panel before proceeding with any final decisions on the consultation.
For further inquiries, please contact me at or via email at . Alternatively, you may reach Mr. Ivan Wong, Director of the Industrial Relations Department , at or .
Best regards,
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association
Email: panel_fa@legco.gov.hk
To: Hon. Lee Wai-hung Robert, Chairman, Financial Affairs Panel
cc: Hon. Kwok Wai-keung Aaron
Date: January 22, 2024
Subject: Feedback on HKEX's Consultation Paper on Severe Weather Trading of Hong Kong Securities and Derivatives Markets
On November 30, 2023, Hong Kong Exchanges and Clearing Limited (HKEX) released a consultation paper concerning the continuation of trading activities during severe weather conditions. As stakeholders in Hong Kong’s financial and securities markets, we support initiatives that enhance the industry and the region. However, the consultation seems rushed and incomplete. Our primary concerns are outlined below:
Employee Safety in Severe Conditions
The proposal's core concern should be the safety of employees and investors. We advocate for electronic and remote operations during severe weather, advising against physical business operations. The consultation notes that during the pandemic, industries gained experience in remote work. However, pandemic work-from-home practices were diverse, often involving rotational work and not solely remote operations. Emergency management differs from weather-related disruptions. Ensuring normal trading during severe weather requires collaboration across various sectors, including banking, securities, and public safety services, which incurs societal costs and impacts employee safety.
Revising the "Business Day" Concept
HKEX suggests maintaining typical listing activities during severe weather, implicating the banking sector's role in financial transactions. This may necessitate redefining "business day," a term crucial for employment contracts and planning. It remains uncertain whether HKEX has engaged in comprehensive consultations with the banking sector and governmental bodies on this significant issue.
Concentration and Cost Implications
Implementing robust cybersecurity measures demands significant investment, a burden primarily manageable by large financial institutions. Recent market reports highlight the dominance of Groups A and B brokers, who handle the majority of trading volumes. Severe weather trading arrangements may exacerbate this trend, sidelining smaller brokers and increasing market concentration, thereby posing systemic risks.
Accountability Concerns
With employees expected to work remotely during severe weather, questions about network security and accountability arise. If a cybersecurity issue occurs, who bears responsibility—the individual or the institution? Furthermore, if employees must travel to address system issues and are unable due to weather, who is accountable for any resulting losses? The consultation lacks detailed analysis on these operational challenges.
In conclusion, the proposal to maintain trading during severe weather has widespread implications beyond the securities industry. We urge HKEX to engage with the Legislative Council and/or the Financial Affairs Panel before proceeding with any final decisions on the consultation.
For further inquiries, please contact me at or via email at . Alternatively, you may reach Mr. Ivan Wong, Director of the Industrial Relations Department , at or .
Best regards,
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association