The HKEx is mulling its options on ways to adjust the daily 10-minute closing session that has plenty of opponents. The exchange also vows to boost its international profile by offering HDR and gold-futures trading. Bloomberg

Another round of business consultations is in the works as the HKEx scrambles to come up with a way to limit the risk of market manipulation during the daily 10-minute closing session.

Speaking to reporters at a party for the exchange's eighth anniversary, HKEx Chief Executive Paul Chow said that the business community should be consulted starting in August.

There have been some calls for the exchange to implement a random closing time for the market, and perhaps introduce short-selling during the 10-minute auction, thereby making it more difficult for investors to manipulate stock prices.

"We still need to review the opinions before any decisions are made," he said.

Implemented near the end of May, the new closing auction has been heavily criticized. Part of the reason was that the rebalancing of passive funds tracking the MSCI index sent numerous stocks up and down significantly on May 30.

Chow said the MSCI index company has already been consulted on ways to increase the level of transparency, but he didn't give further details.

International profile

Its closing-auction troubles aside, the HKEx's hope of enhancing its international profile hasn't been dampened.

Responding to recent hints that the Hong Kong government might be eyeing the introduction of crude oil futures, HKEx's chairman Ronald Arculli said the exchange is open to such a system.

"Both European and American markets have oil futures; we are open to that if the government in fact favors the implementation," he said. "But any review will have to come after the commencement of gold-futures trading."

HKEx's Chow said that the details and timetable of gold-futures trading may be unveiled early next month.

Traders and other market participants would then have three months to familiarize themselves with the new futures trading before the official kickoff in October.

Futures trading is an internationally recognized practice that allows for the buying and selling of contracts that delineate a fixed amount of commodities for a fixed price at a future date.

Other than the introduction of futures trading, the Hong Kong Stock Exchange is also on the verge of introducing depository receipts (HDR). They are securities that allow local investors to invest locally in foreign companies listed on overseas bourses.

That could be a ways off, though, as Chow said they have yet to begin discussions with foreign companies.

(HK Edition 06/20/2008 page2)