* Half-day trading on the eves of Christmas, New Year, and Lunar New Year

① Pre-opening Session (POS)

The pre-opening session is a 30-minute trading session before the morning market opens. It provides an orderly and smooth price discovery process for overnight events that might affect the market. The pre-opening session also collects buying and selling orders to calculate a price at which the maximum volume of shares can be matched. Therefore, the POS determines a fair opening price for securities.

During the pre-opening session, the trading system will calculate a price (Final Indicative Equilibrium Price) at which the maximum volume of shares can be matched for trading. The orders will be matched according to the following priority:

(1) At-auction Orders (AO) have a higher priority than At-auction Limit Orders (ALO) in the matching mechanism.

Image Source: Pre-opening Session Infographic (hkex.com.hk)

In December 2019, Hong Kong Exchanges and Clearing Limited (HKEX) decided to optimize the pre-opening session auction mechanism of the Hong Kong securities market (POS). After the optimization of the POS, market participants can input and reject non-direct business manual trades for the securities applicable to the POS during three periods in the pre-opening session, namely Order input, No-cancellation, and Random Matching Period.

② Continuous Trading Session (CTS)

During the continuous trading session, orders are continuously executed in strict price and time priority arematched one by one based on the sequence entered into the system. An order entered into the system at an earlier time must be executed in full before an order at the same price entered at a later time is executed.

Reference: https://www.hkex.com.hk/Global/Exchange/FAQ/Securities-Market/Trading/Securities-Market-Operations?sc_lang=en#collapse-3

Price Limits:

Sell orders cannot be priced at less than 9 spreads below the best bid price, or more than 24 spreads above the best ask price (price spreads vary based on the stock price).

Buy orders cannot be priced at more than 9 spreads above the best ask price, or lower than 24 spreads below the best bid price (price spreads vary based on the stock price).

Additionally, the size of each buy or sell order cannot exceed 3,000 board lots (shares).

③ Closing Auction Session

The closing auction session begins after the continuous trading session ends at 16:00.

Closing auction allows trades to be executed at the closing price, which is a trading mechanism commonly used in international stock markets. During the closing auction session, market participants who wish to trade at the closing price can enter buy and sell orders. Their orders interact with one another to determine a consensus closing price for each stock, at which the trades are executed.

*Half-Day Trading for Eves of Christmas, New Year and Lunar New Year

Image Source: Closing Auction Session (CAS) (hkex.com.hk)