Media Workshop
On
New Contingency Procedures
In the Event of a Market Interruption
in the Derivatives Market
7 August 2002
Agenda
• Introduction
• Communication Channels
• Principles for the New Contingency
Procedures
• Market Arrangements during the Afternoon
Trading of HSI and MHI Futures Markets
• Determination of the Settlement Price
• Q&A
Introduction
• Recovery of HKATS Central System Interruption
– Two modes of System Recovery in the event of
a system interruption
1) Automatic Failover – System will automatically recover
2) Manual Site Failover – System cannot be recovered
automatically
• Time to System Recovery by Manual Site Failover
– 45 minutes under normal situation
• The Procedures/Measures applied to Manual Site
Failover
Two modes of System Recovery in the event of
a system interruption
The HKATS in the primary site and the backup site are operating in
parallel. All trade data input into HKATS in the primary site will be
copied to the backup site simultaneously. In the event of system
problems, there will be two modes of system recovery, depending on
the nature of the problem.
(1) Automatic Failover
– Any hardware failure will be handled with the "hot-backup”
arrangement, which enables non-stop trading.
(2) Manual Site Failover
– When the primary site is completely down (e.g. in a power
failure situation), the current site failover procedures require
45 minutes.
(2) Manual Site Failover
The key Manual Site Failover procedures include:
• Despatch operations and application support staff to the backup
site
• Re-configure the system to operate only at the backup site (reconfigure the load-balancing arrangement between the two sites)
• Activate the backup derivatives clearing system
• Activate the backup price reporting system
• Restart and recover all the peripheral systems and devices for full
market operations
(The above procedures will be conducted concurrently)
Based on a review of the available data, HKEx's time
requirements are in line with other major exchanges.
Communication Channels
•
The Exchange will utilise one or more of the
following communication channels to notify
Participants of the market arrangements in case
of a system interruption:
– Participants Email System
– Stock Exchange News System
– Exchange Pager System for HKFE Participants (available
end of August)
– Market Messages Window on HKATS (depending on the
nature of the system problem)
– HKATS Email System (depending on the nature of the
system problem)
Communication Channels
• The Exchange will utilise one or more of the
following communication channels to notify the
news media and the public of the market
arrangements in case of a system interruption:
– News release distributed via email, fax and website
– Emergency broadcast message on website
– Response to news media enquiries
– Messages to information vendors and their subscribers
through the Stock Exchange News System
– Messages disseminated through the Exchange News
System will be posted on the HKEx website on a near
real-time basis from mid-August
Principles for New Contingency Procedures in the
Event of a Market Interruption Affecting the
Trading of Derivatives
• Extension of trading applicable to HSI and MHI
Futures only
• No extended trading in HSI Options, MSCI, HIBOR,
EFN, Dow Jones Futures, Stock Futures and Options,
and International Stock Futures and Options markets
• The extended trading will be a 15-minute session
provided that the markets will not close beyond 5:00
pm
Principles for New Contingency Procedures in the
Event of a Market Interruption Affecting the
Trading of Derivatives
• No extended trading on the last trading day of the
expiring HSI and MHI spot month futures contracts
• No Pre-market Opening Period if system fails to
recover by either 8:45 am or 1:30 pm
• Trading to resume 30 minutes after system recovery
and advance notice be given to Participants, the
news media and the public as soon as practicable
Market Arrangements during the Afternoon
Trading of HSI and MHI Futures Markets
• System Recovers at or before 3:15 pm
– All markets reopen 30 minutes after the confirmed system
recovery time and close as scheduled
• System Recovers between 3:15:01 pm and 3:30 pm
– All markets, except Stock Futures and Stock Option, reopen 30
minutes after the confirmed system recovery time and close as
scheduled
– Stock Futures and Stock Options market will reopen on the
next business day
Example 1(HSI & MHI Futures) *
HKATS is interrupted in the afternoon session and
recovers at or before 3:30 pm
Events
Time___
• HKATS recovers at
3:30 pm
• After added 30 mins of preparation 4:00 pm
• Markets reopen at
4:00 pm
• Markets trade for another 15 mins
4:15 pm
• Markets close at
4:15 pm
No Extended Trading Required
*All markets, except Stock Futures and Stock Options,
close as scheduled
Market Arrangements during the Afternoon
Trading of HSI and MHI Futures Markets
• System Recovers between 3:30:01 pm and 4:15 pm
– HSI and MHI Futures markets reopen 30 minutes after the
confirmed system recovery time and trade for a fixed period of
15 minutes provided that the markets will close no later than
5:00 pm
– HIBOR EFN and ISFO markets reopen 30 minutes after the
confirmed system recovery time and close as scheduled
– MSCI, HSI Options, Stock Options, Stock Futures and Dow
Jones Futures markets reopen on the next business day
•
System Recovers after 4:15 pm
– All markets on HKATS reopen on the next business day
Example 2(HSI & MHI Futures)
HKATS is interrupted in the afternoon session and
recovers between 3:30 pm and 4:15 pm
•
•
•
•
•
Events
Time___
HKATS recovers at
4:00 pm
After added 30 mins of preparation 4:30 pm
Markets reopen at
4:30 pm
Markets trade for another 15 mins to 4:45 pm
Markets close at
4:45 pm
Extended Trading Required
Determination of Settlement Price in Case of
Extended Trading for HSI & MHI Futures
• The HKFE Clearing Corporation (HKCC) will provide the
Settlement Price within 15 minutes after the close of the Cash
market
• The Settlement Price is calculated by applying the previous day’s
premium or discount of the futures settlement price to the cash
closing price, to the current day’s cash market close
• Example
_________________ ____Day T-1___________Day T
Futures (Spot)
10,500
n.a
Cash
10,550
10,820
Then Discount = 10,500 – 10,550 = - 50; and
Spot month Futures Settlement Price = 10,820 - 50 = 10,770.
• The Settlement Price so determined will apply to the
Open Interest and all trades conducted during the
extended trading session, if any.
Q&A
Thank You
07 - 09 August 2002
New Contingency Procedures