Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce that it will implement the second phase enhancement of the Volatility Control Mechanism (VCM) in its securities market on 29 March 2021.
The first phase enhancements were successfully launched in May 2020, and currently only one trigger per applicable security is allowed in each trading session. The second phase enhancement will allow multiple triggers of the VCM per applicable security in the same trading session.
“We are pleased the first phase of the Volatility Control Mechanism enhancements have been well received by the market. In view of the orderly market operations since the launch of the first phase, we will implement Phase 2 as planned to further strengthen our market integrity,” said HKEX’s Head of Markets Wilfred Yiu.
HKEX’s VCM is designed to prevent extreme price volatility amongst individual stocks and was first introduced to the securities market in August 2016.
HKEX proposed the VCM enhancements in a consultation paper in 2019. This followed guidance issued by the International Organisation of Securities Commissions asking regulated markets to review and adjust their volatility controls to ensure that they stay relevant with respect to the latest market developments.
Further details of the VCM can be found on HKEX website.
Source: HKEx