Editorial : Paralysis of HKEX's futures trading system

【明報專訊】CHAOS and confusion surrounding the futures trading system of Hong Kong Exchanges and Clearing Limited (HKEX) resulted in the unprecedented suspension of all derivatives trading yesterday afternoon (September 5). As Hong Kong is at an eventful juncture and foreign investors are having greater misgivings about the city, the incident will do all harm but no good to Hong Kong's image as an international financial centre — even if it was a purely technological malfunction with nothing to do with human interference such as a hacker attack.

No sooner had the markets opened yesterday morning than many security brokers found the futures and options trading system to be malfunctioning. Transactions were handled very slowly, so much so that it was impossible to place an order. Futures transactions dwindled considerably. As the situation persisted, HKEX announced at noon that due to prolonged connection problems with the Hong Kong Futures Automatic Trading System (HKATS), trading of all derivatives would be suspended from 2 pm so as to maintain order in the markets. Only the clearing system of derivatives would continue to operate. As the futures market was paralysed, some investors were unable to close their positions and would inevitably incur some losses. However, according to the Securities and Futures Ordinance, it is difficult for investors to claim compensation from HKEX. Some people in the securities industry say that what was fortunate was that there was not much fluctuation in the futures market yesterday morning. They do not believe investors have suffered heavy losses. Had the shutdown happened on the day before yesterday, when the Hang Seng index rose sharply by 1,000 points on the strength of the government's decision to withdraw the amendment bill, investors' losses would have been catastrophic.

The storm of protest against the amendments has been going on for nearly three months. Though Hong Kong's status as an international financial centre has not been challenged directly, the atmosphere for investment has inevitably been affected. Charles Li Xiaojia, chief executive of HKEX, stressed in mid‑August that HKEX was functioning normally in all aspects and that the system was secure, stable and unaffected by social turmoil. The words still ringing in one's ears, Hong Kong's futures market is in disarray at such a sensitive juncture. The Hong Kong government has recently taken out advertisements in foreign newspapers to stress that Hong Kong is still an economy with a solid foundation. The chaos in the futures market has poured cold water on Hong Kong's image as an international financial centre. The paralysis is serious in nature and has given rise to all sorts of discussion, with some netizens jokingly calling it "a non‑cooperation movement by HKEX". Some are sceptical whether HKEX futures market has a backup system, while others speculate on the possibility of a hacker attack.

Given the widespread feeling of unease in Hong Kong, anything untoward can easily give rise to speculation. For example, in early July a number of online forums and websites went down simultaneously. The server provider explained in no time that the problem was due to a bug, stressing that it had nothing to do with distributed denial‑of‑service (DDoS) attacks. Still there are people who believe there was a hacker attack. Yesterday HKEX said that an initial investigation suggested that the incident was due to a problem with the software of the trading system, and that HKEX was working together with the supplier for a solution. HKEX should inspect the whys and wherefores of the incident as soon as possible and explain in detail to the public. Any prevarication will only make investors even more vigilant.

明報社評2019.09.06:期貨市場癱瘓太兒戲 港交所有負公眾期望






malfunction : a fault in the way a machine or part of someone's body works

unease : the feeling of being worried or unhappy about sth

prevarication : the act of not giving a direct answer to a question in order to hide the truth

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