Concerns About Maintaining the Hong Kong Stock Market Operations During Severe Weather
Release Date: 2023-10-13
October 11, 2023.
To: Mr. John Lee, Chief Executive; Mr. Paul Chan, Financial Secretary; Mr. Michael Wong, Deputy Financial Secretary
Subject: Concerns About Maintaining the Hong Kong Stock Market Operations During Severe Weather
Dear Respected Leaders,
Since Mr. Nicolas Aguzin, CEO of Hong Kong Exchanges and Clearing, suggested examining the feasibility of maintaining stock market operations during severe weather in July 2021, our association has carefully followed this matter. Notably, in the 2023-2024 budget, Financial Secretary Mr. Paul Chan mentioned that HKEX is considering various proposals to enhance trading mechanisms, including strategies for market functioning in severe weather conditions. Representing over 6,000 securities, futures, and asset management professionals, our association, affiliated with the Hong Kong Federation of Trade Unions, is dedicated to advocating for industry rights and improving the welfare of our professionals. We recognize that these prospective arrangements will have a direct impact on the safety and rights of frontline workers. Consequently, we have voiced our concerns through media and public channels to the pertinent government authorities. We stress that if the government implements measures to keep the market open during severe weather without sufficiently ensuring personal safety, we will stand against it.
Measures for market operations during unfavorable weather should only be considered after full assurance of personal safety.
While some claim that operating the market during severe conditions could boost liquidity and offer institutional investors hedging or settlement opportunities, it also significantly heightens the safety risks for securities professionals. For instance, even Macau casinos halt operations during storms. The Hong Kong market faces an average suspension of only 1-2 days annually due to severe weather. Thus, we question the necessity of such a substantial reform for these few days and whether it is possible to balance the associated costs and benefits.
Remarkably, the government issues heat warnings to protect workers during high temperatures and suspends Jockey Club races during severe weather. Does this imply that "human lives are secondary to work"? Currently, HKEX has protocols to suspend trading during Typhoon Signal No. 8 or above, black rainstorm warnings, and extreme conditions. Major stock markets in Europe, the US, Shanghai, Singapore, and Japan are less affected by typhoons due to geographical factors. Although some frontline staff might prefer to work remotely, we must not overlook those who must physically travel to the office. We should guard against societal indifference and not trivialize the safety and lives of others.
Some question why stock exchanges in Shanghai and Shenzhen operate during severe weather or pandemics, but Hong Kong does not. The circumstances are vastly different. Mainland securities firms and banks have ample office spaces to accommodate staff during such times, and during the pandemic, executives in Shanghai could remain in their offices for extended periods. In densely populated Hong Kong, do we possess similar conditions? Has Hong Kong examined why such policies are viable on the Mainland? We cannot simplistically assume that remote working software can effectively manage office computer systems. Additionally, issues like fund deposits involve intricate banking challenges that are not easily resolved.
In a previous television interview, our association urged the government to ensure comprehensive contingency plans for all supporting sectors, including banking, transportation, IT, and insurance. We also request the government and HKEX to engage in extensive dialogues with the industry to devise solutions that do not impose additional burdens on practitioners.
In contemplating the operation of the Hong Kong market during severe conditions, it is crucial to understand the multifaceted impacts on investors and securities firms. Following the Securities and Futures Commission’s guidelines from May 1997, we have conducted thorough assessments of various risk factors, such as credit, market, liquidity, and operational risks, as detailed below:
[Continuation of the document with detailed concerns and proposed solutions regarding market operations during severe weather conditions.]
Finally, our association urges the government to cautiously implement measures ensuring that the market remains open during severe weather only after fully guaranteeing personal safety, without extending trading hours or modifying public holidays in Hong Kong to increase trading days and enhance market turnover.
Sincerely,
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association
To: Mr. John Lee, Chief Executive; Mr. Paul Chan, Financial Secretary; Mr. Michael Wong, Deputy Financial Secretary
Subject: Concerns About Maintaining the Hong Kong Stock Market Operations During Severe Weather
Dear Respected Leaders,
Since Mr. Nicolas Aguzin, CEO of Hong Kong Exchanges and Clearing, suggested examining the feasibility of maintaining stock market operations during severe weather in July 2021, our association has carefully followed this matter. Notably, in the 2023-2024 budget, Financial Secretary Mr. Paul Chan mentioned that HKEX is considering various proposals to enhance trading mechanisms, including strategies for market functioning in severe weather conditions. Representing over 6,000 securities, futures, and asset management professionals, our association, affiliated with the Hong Kong Federation of Trade Unions, is dedicated to advocating for industry rights and improving the welfare of our professionals. We recognize that these prospective arrangements will have a direct impact on the safety and rights of frontline workers. Consequently, we have voiced our concerns through media and public channels to the pertinent government authorities. We stress that if the government implements measures to keep the market open during severe weather without sufficiently ensuring personal safety, we will stand against it.
Measures for market operations during unfavorable weather should only be considered after full assurance of personal safety.
While some claim that operating the market during severe conditions could boost liquidity and offer institutional investors hedging or settlement opportunities, it also significantly heightens the safety risks for securities professionals. For instance, even Macau casinos halt operations during storms. The Hong Kong market faces an average suspension of only 1-2 days annually due to severe weather. Thus, we question the necessity of such a substantial reform for these few days and whether it is possible to balance the associated costs and benefits.
Remarkably, the government issues heat warnings to protect workers during high temperatures and suspends Jockey Club races during severe weather. Does this imply that "human lives are secondary to work"? Currently, HKEX has protocols to suspend trading during Typhoon Signal No. 8 or above, black rainstorm warnings, and extreme conditions. Major stock markets in Europe, the US, Shanghai, Singapore, and Japan are less affected by typhoons due to geographical factors. Although some frontline staff might prefer to work remotely, we must not overlook those who must physically travel to the office. We should guard against societal indifference and not trivialize the safety and lives of others.
Some question why stock exchanges in Shanghai and Shenzhen operate during severe weather or pandemics, but Hong Kong does not. The circumstances are vastly different. Mainland securities firms and banks have ample office spaces to accommodate staff during such times, and during the pandemic, executives in Shanghai could remain in their offices for extended periods. In densely populated Hong Kong, do we possess similar conditions? Has Hong Kong examined why such policies are viable on the Mainland? We cannot simplistically assume that remote working software can effectively manage office computer systems. Additionally, issues like fund deposits involve intricate banking challenges that are not easily resolved.
In a previous television interview, our association urged the government to ensure comprehensive contingency plans for all supporting sectors, including banking, transportation, IT, and insurance. We also request the government and HKEX to engage in extensive dialogues with the industry to devise solutions that do not impose additional burdens on practitioners.
In contemplating the operation of the Hong Kong market during severe conditions, it is crucial to understand the multifaceted impacts on investors and securities firms. Following the Securities and Futures Commission’s guidelines from May 1997, we have conducted thorough assessments of various risk factors, such as credit, market, liquidity, and operational risks, as detailed below:
[Continuation of the document with detailed concerns and proposed solutions regarding market operations during severe weather conditions.]
| Item | Challenge | Recommended Actions | Collaborating Entities | |
|
|
Clarification of Adverse Weather Conditions | Various forms of adverse weather can differentially affect the market. For example, the impact of Typhoon Signal No. 8 compared to No. 10 is markedly distinct; additionally, flooding issues and whether to consider other extreme weather events like earthquakes or heavy rainfall-induced flooding need to be addressed. |
|
Relevant government departments |
|
|
Market Operations During Adverse Weather – Infrastructure Support | Infrastructure Evaluation:
Support for Exchanges and Clearing Houses:
Office and Remote Work Considerations:
|
|
|
|
|
Regulatory and Legal Obstacles | Financial institutions are subject to numerous regulatory mandates and obligations, which can be difficult to fulfill during adverse weather events. This includes compliance with reporting, settlement deadlines, risk management protocols, and labor protection laws. Failing to comply may result in legal repercussions and damage to institutional reputation. |
|
|
|
|
人員風險 | The requirement for securities and banking employees to work necessitates that transportation sector personnel are also on duty. During severe weather events like typhoons, risks arise from shattered glass or objects being blown from buildings, necessitating emergency personnel involvement, which could compromise their safety and strain healthcare resources. Moreover, generalized insurance typically does not cover natural disasters, raising questions of liability in the event of accidents. Public dissatisfaction often focuses on the government, creating additional risks for authorities. 《職業安全及健康條例》的其中要點是，為促進工作地點的安全及健康，以及提供及維持安全及健康的工作環境。對於惡劣天氣情況下，會否受到條例中的挑戰成疑問。 |
|
|
Finally, our association urges the government to cautiously implement measures ensuring that the market remains open during severe weather only after fully guaranteeing personal safety, without extending trading hours or modifying public holidays in Hong Kong to increase trading days and enhance market turnover.
Sincerely,
Mofiz Chan
Chairman
Hong Kong Securities and Futures Professionals Association