Securities

STOCK EXCHANGE OF HONG KONG SECURITIES TRADING INFORMATION

Automatic Order Matching and Execution System (AMS)

Launched on the 23rd of October 2000, the AMS is a third generation trading system developed by the Stock Exchange of Hong Kong Ltd.. The system consists of four key components: the Trading Terminal, the Multi-Workstation System (MWS), the Broker Supplied System (BSS); and the Order Routing System (ORS). Exchange Participants are able to choose any of the components as their trading facilities. Depending on the type of trading facility investors can place orders via various channels to their brokers. The ORS enables investors to place trading requests electronically over the Internet and other access channels (such as mobile phones using the network of operators who participate in AMS/3). Only Exchange Participants using MWS and BSS can receive investor orders through ORS.

Order Types Available
Pre-opening Session
At-auction orders – These orders are entered with no specific price and will be executed at the Indicative Equilibrium Price (IEP). This order type has the highest matching priority. Any part of the order that is not filled will be canceled before the Continuous Trading Session.
At-auction limit orders – These orders are entered with a specific price. If the specified price is equal to or greater than (less than for sell orders) the Indicative Equilibrium Price (IEP) they MAY be executed. Outstanding at-auction limit orders will be put in to the price queue and remain working into the Continuous Trading Session.

Continuous Trading Session
Limit orders – Limit orders are entered at a specified price and will only be executed at that price or better (lower for buy, higher for sell). Any remaining part of order will remain in the price queue at the limit order price.
Enhanced Limit Orders – These orders can be filled up to 5 price levels equal to or at a better price than the order price. Any remaining part of the order will sit in the order book at the order price.
Special Limit Order – These orders can be filled up to 5 price levels equal to or at a better price than the order price. Any remaining part of the order will be canceled and not be entered in to the order book.

Order Amendment and Cancellation

Orders resident in the Central Order Book may be amended, canceled or inactivated only during the period of 30 minutes before the opening of each trading session or during trading hours. During the period of 30 minutes before the opening of a trading session, users can modify information of the orders, change the duration of validity and reduce the quantity of the order. Such actions will not affect the time priority of valid orders. However, any attempt to amend the order price or increase the order quantity during the period of 30 minutes before the opening of a trading session will result in the cancellation of the order and the entry of a new inactive order.

Trading Periods

Pre-Market Opening Period

In the pre-opening session between 9:30 am and 10:00 am the system will only accept at-auction and at-auction limit orders. Orders are accumulated over a certain period of time and matched at a pre-defined order matching period. Orders are matched by order type, price and time priority (at-auction orders hold a higher matching priority), at the final Indicative Equilibrium Price (IEP). The pre-opening session comprises of fours different periods noted above.

During the Order Input Period from 9:30am to 9:45 am both At-auction and At-auction limit orders may be placed. These orders can be canceled or modified during this period. Also, both the Indicative Equilibrium Price (IEP) – the best price that the greatest shares are expected to trade and the Indicative Equilibrium Volume (IEV) – the expected greatest volume that are expected to trade at the IEP will constantly be updated and displayed.

Sample Order Book

Orders are sorted by matching priority

Determining the Indicative Equilibrium Price (IEP)

The Indicative Equilibrium Price is $32.00 as the most shares can be traded

During the Pre-order Matching Period from 9:45am to 9:50am only At-auction orders can be place and no orders can be modified or canceled. Preventing orders from being modified or canceled will prevent any large changes in the IEP. This in turn will attract more At-auction orders as the IEP will be closest to fair market value.

The Order Matching Period from 9:50am to 9:58am prevents any new orders and changes or cancels to existing orders. Orders are instead matched by order type (At-auction first), price and then by time at the final IEP. Any At-auction orders not filled will be canceled and any At-auction limit orders will remain active into the Continuous Trading Session.

Order Matching at the IEP

Finally, the Blocking Period from 9:58 am to 10:00am is a break from the Pre-opening Session and the regular or Continuous Trading Session. No order types or matching occurs at this time.

The remaining At-auction limit orders will remain active in the Continuous Trading Session

During the regular or continuous trading session limit, enhanced limit and special limit orders only. There is an option for an All or None Qualifier (AON) where the order is executed immediately AND completely or rejected without being written into the central order book. Orders are continuously executed in strict price and time priority. An order entered into the system at an earlier time must be completely executed before any new orders submitted at the same price.

Closing Price Calculation
Under normal operation environment, the closing price of a stock is determined by taking the median of 5 nominal prices in the last minute of the trading hours. The system will take up 5 snapshots on the nominal prices at 15-second interval starting from 3:59:00 p.m. The following example will illustrate the calculation:

* The nominal price is determined by comparing the current bid price, the current ask price and the last price in accordance with Rule 101 of the Rules of the Exchange.

The median nominal price is $26.40, which will then be taken as the closing price. Choosing the median of five snapshot nominal prices ensures that the closing price will not be biased by one single trade.