HKEx reinstates stock market closing auction

The Hong Kong Stock Exchange (HKEx) reinstates its closing auction system on July 25 after a seven-year hiatus. The closing auction is a process of setting a closing price for a security and allowing it to trade at that price. Such a mechanism can enable large institutional investors to buy stocks at a set price after markets close instead of attempting to submit orders just before the close of trade when volatility can be high.

The Asia Securities Industry & Financial Markets Association (ASIFMA) stated: “HKEx’s reintroduction of a stock-market closing auction is a welcome development to bring Hong Kong in line with practice at exchanges around the world, almost all of which have a closing auction. The new model incorporates design features that have been shown to be effective in countries including the UK, Germany and Australia. The closing auction is a significant and positive development in furthering Hong Kong’s role as leading international financial centre.”