SEHK: The Hong Kong Stock Exchange

 

The Hong Kong Stock Exchange (SEHK) is the second largest Asian stock exchange (the largest being the Tokyo stock exchange), and is located in Hong Kong, China. The SEHK ranks sixth the global list of stock exchanges, coming in behind Euronext. A regular market day in Hong Kong begins with a pre-opening session from 9 a.m. to 9:30 a.m. which sets the opening prices of securities at 9:20 a.m. Opening hours are observed from 9:30 a.m. to 4:00 p.m., with an hour-long lunch break between noon and 1 p.m. during which very few securities continue to be exchanged.

The History of SEHK

Securities trading is nothing new in China as reports on trading date back to the mid-19th century. It was not until the late-19th century, however, and specifically in the year 1891, that the Association of Stockbrokers in Hong Kong was established as the first formal market. In 1914, the Association changed its name to the Hong Kong Stock Exchange.

The Hong Kong Stock Exchange merged with the Hong Kong Stockbroker’s Association, which had been established in 1921, and working together the two newly-merged institutions re-installed the stock market after the Second World War. The quick expansion of Chinese economy saw the creation of three other stock exchanges in the 1960s and 1970s. By 1980, the need of centralisation of the highly diffused market called for stricter regulations which lead to the creation of SEHK, the Stock Exchange of Hong Kong Limited, which incorporated all four previously existing markets. The four individual exchanges officially went out of business on 27th March 1986, and all trading took place under the new SEHK via a computer-aided system on 2nd April 1986.

Electronic trading was initially introduced to the operations of the Hong Kong Stock Exchange on 1st November 1993 through the “Automatic Order Matching and Execution System,” AMS/1; the second phase of the system was incorporated in January 1996 as AMS/2. This system became the basis for all off-floor trading and it was complete and finalised on 23rd October 2000 with the implementation of AMS/3.